Implementation Study of Activity Based Costing System to Define Indirect Costs on Ship Repair Industries

Abstract

Good quality, the right turnaround time, and affordable service costs are three important points that must be paid attention to in repair shops offering their services. In determining the selling price of repair services, companies need accurate information about the cost of goods manufactured, which consists of direct costs and indirect costs. In general, the imposition of indirect costs to products uses a traditional cost accounting system so that costs distortions often occur. With the development of existing knowledge, companies must be able to increase their competitiveness and find alternative methods than traditional cost accounting systems. The activity based costing method developed and became a cost accounting method by assigning costs to activities based on the consumption / use of resources. First, activity identification is carried out based on existing business processes, both direct and supporting repair activities. Second, from the results of the identification of existing activities, identification of needs that trigger an activity that can be called an activity driver is carried out. After identifying the activity driver, the type of activity in the ship repair process is obtained which affects the high indirect cost expenditures. By using the activity based costing method, the indirect cost value on ship 1 is IDR 78,994,805, - and on ship 2 of IDR 57,890,169, -. These values are true values and can be traced to each activity through the use of resources. From these results it can be seen that the value of indirect costs when calculated by the activity based costing method produces a smaller value when compared to the existing method. On ship 1, using the activity based costing method, indirect costs decreased by 44% from the calculation of the existing conditions and on ship 2 decreased by 38% from the calculation of the existing conditions.