Customization of Cost Allocation Monitoring Report for Improving Activity-Based Costing Process

Abstract

In the age of a global competition environment, accurate costing measurement is essential for every company. The more accurate allocation process to final outputs indicates the potential impact a company's decision has on costs. Activity-based costing is a technique for allocating organizational costs to activities that utilize the organization's resources and then tracing the costs of these activities to products, consumers, or distribution channels that generate profits or losses for the business. With a large number of cost allocations in the business processes, it makes it difficult for companies to identify the number of costs that have been allocated, especially if the data that must be processed is in large quantities. To overcome this problem, it is necessary to require cost mapping for the business process from resource to cost center to compare the number of costs that have been allocated. This research discusses the application of monitoring reports by using ALV customization in XYZ Ltd. This report was created using an iterative and incremental model approach. The simulation results show a 50% reduction of the time to execute the customization monitoring report, and it only takes one step to generate reports and analyze data. The results of this research are expected to be used as a study to provide the right solution in facilitating the process of checking the cost allocation on ABC to objectively monitor and analyze each business process (resource, activity, and cost object) and support the decision-making process.