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It can be seen from the table above that the allocation overhead by using ABC

has a variety of cost driver than the standard cost. With the same total overhead

can produce overhead allocations that vary by driver costnya.

 JDCW ABC should use in determining the costs / unit because JDCW have a

diversity of products produced and every product consumes dierent overhead. herefore! "hen using standard costing the overhead allocation results become

inaccurate. he resulting accuracy of the ABC system "ill re#ect the actual

activities that occur in ma$ing a product.

While using the old system! standard cost system! create a particularly bad

eect on the allocation of the price per unit that becomes inaccurate.

Inaccuracies impact on cost per unit that does not %t. here are parts that are

set too lo" &under costs' and some parts are set too high &over costs'.

 hings In#uenced After Implementation ABC

(ran$ )tevenson summari*es the results obtained +ear and )pecial ,roducts

division in implementing Activity Based Costing-

William eith and ic$ 0intila have tried to apply the ABC in the 11 sample JDWC

components and compare them "ith the costs generated by a standard costing

system. hey also e2perimented "ith changing the lot si*e currently used in the

34, system. In particular! the ABC 3odel recommend them to double the

average lot si*e in order to optimi*e manufacturing costs. )ubse5uent research

sho"ed the strong in#uence of the shift in the product mi2 &product mi2' to

streamline the use of turning machine.

Division Changes

During the years 6789 : 678;! the division e2perienced JDWC restrictions into 9

product lines of business- gears and shafts! machined parts! cast iron ma$ing!

heat treating! and sheet metal "or$. As far as possible be reorgani*eddepartment of cell and process until adoption of the approach maufa$tur Just : In

: ime to shorten lead times! improve 5uality! and also lo"er the cost

ABC model used in order to more eectively then made several changes in its

implementation! namely to

6.

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And the division also should change the bidding system in their transfer pricing

practices. And begin to negotiate for >mar$et:based:price> "hich is under the full

cost

?. ,rocess ,lanning

,art engineering process using a model comparison of the relative e@ciency of

the engine for dierent types of steel and part number to select "hich parts are

processed according to the type of engine! because the ABC sho" setup and

production costs are higher than the 34,. ,rocess engineering using ABC to

calculate costs on the basis of optimal run / year and can be negotiated for the

customer to run a smaller receives at a cheaper price

. o" 0alue:Added ,arts

+ear and special products accelerate the displacement of lo":volume! short:

running part of the turning machine. Appro2imately 6 part re5uires more than

? hours of direct laborE overall calculated 7F of all direct labor is left to the

engine. But the part that less than 8 hours "ill be outsourced. By coincidence!

the remaining part is still undetermined! but $eputusanyang made based on

more accurate costing ABC.

 he combination of displacement 0A part is e2pected to increase the average

run time! reduce the comple2ity of scheduling and reduce the demand forsupport sta.

1. Cell Arrangements

,lant infrastructure changed from the system into a machine ro" per:cell system.

)ome machines are grouped together and used for high:run part.

9. ayout

ABC also assists management in regulating the machining department.

)econdary operations "hich have a high cost caused management to restore

menGad previous division and return to the building before being transferred. o

get a bigger place! turning machine that is not e@cient anymore discarded. hen

to minimi*e the distance bet"een barstoc$ handling "ith pac$aging and

shipping! these activities are made to be closer to be more e@cient. But

unfortunately the ne" layout has not been tested during the production process

due to the ne" set during the month of August 678;! "hile in January 678F the

plant "as closed. Ho"ever there is a change in the layout that has been applied

in 6789 and made a signi%cant change. ayout "hich "as successfully

implemented during the year is the process engineering group. Initially! process

engineering group is located a"ay from the sales #oor but right no" in the

middle of the machining area. As a result of the transfer of communication

bet"een personnel of this layout becomes easier.

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(rom a comparison on 11 samples above! obtained results that vary from the

beginning "hen using standard costing and using ABC! there are cost becomes

smaller and becomes larger. Ho"ever! the advantages of using the ABC method

is the cost incurred are the actual costs and more accurate. hus avoidingovercosting or undercosting and companies can compete "ith other vendors "ith

pricing based on actual costs! although there are some goods become higher

costnya! many other goods are also lo"er costnya. At the moment it is possible

to use standard costing happen overcosting and undercosting so pro%t margins

obtained "as not actual. he above table also sho"s that the purpose of the use

of the ABC method is not to get a smaller fee! but to get ceminan actual cost.

(uture of ABC

Although ABC is very useful! but the bene%ts are still limited to-

6. ABC only runs on each individual computer! not on a computer that is

integrated "ith a data base of division

?. ABC is only used for turning machine operating receipts