Implementation of Activity-Based Costing and Activity-Based Variance Analysis in Food Industry

Abstract

Activity based costing assings overheads to products with convenient drivers and makes costs of products visible on activities level. Activity based variance analysis approaches reveals variances on product and activity level. Activity Based Costing and Activitiy based variance analysis are tools methods for continuous improvement and cost management. Study aims to apply activity-based costing and activity-based variance analysis in food industry. First stage covers observation and data collection period. Implementation preiod starts with activity-based budgeting process. Than, overheads assigned to products following activity-based costing steps than using activity-based variance analysis approaches variances are calculated. Activity-based costing implementation results provided evidence that overheads consist important part of food costs. Activity-based variance analysis results revealed that variances on activity and product level.