Computerized Activity Based Costing System for process industries, A Case Study On Zemilli Paint Factory
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Date
2006-11
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Addis Ababa University
Abstract
There is increasing evidence that external and internal pressures are being placed upon
companies to acknowledge, characterize and analyses environmental issues, impacts and
costs. It has been becoming crucial that companies will increasingly be faced with
responsibilities extending outside the factory gate to point of sale and beyond. Companies
will need to adopt a life cycle perspective into the decision-making framework, to support
managements' decisions regarding the environmental impacts and costs of activities and
products.
The manufacturing and process sector has suffered from poor management systems for a
long time. In process industries, the need for better cost management systems arises from
efficiency problems and lack of resources. With activity-based costing, the processes and the
costs of activities become more transparent than earlier.
ABC has highlighted that true understanding of what it costs to provide products/services is
at the same time a tool for better management. It helps to better understand and serve as
guides in any business process improvement initiatives, and to subject resources to its
efficient usage. In a nutshell, it helps to make more effective business process improvement
at more transparent cost.
This study is an illustration to point out required changes that could be made during the
activity-based costing process in Zemilli paint factory. It shows the benefits and advantages
that have come true because of the ABC-process and discuss the problems connected to this
process. The ABC-process consists of two phases. The phases and their outcomes are
described in chapter four preceded by the basic principle of ABC in chapter three of this
study.
The first chapter of the thesis dedicated to introduction, background, the importance,
objective and the general outline of the paper. The second chapter of the thesis gives the
existing condition of process industries in Ethiopia considering specific attention to Zemilli
paint factory. While the third chapter of the thesis is fully dedicated to literature survey and
Computerized Activity Based Costing System for process industries, A Case Study On Zemilli Paint Factory.
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Addis Ababa University, School of Graduate Studies, Department of Mechanical Engineering
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followed by chapter four which gives emphasis to problem formulation and the Activity
Based Costing model developed to the factory.
The thesis is wind up by including chapter five with outline information to the developed
visual basic programming using ABC principles. Finally a conclusion and recommendation
is drawn out from the executions of the study in chapter six.
The most concrete result of the whole process is a database with visual basic programming
working on ABC-model. The model can be used as a tool of daily management. It has been
used to find out the costs of each activity and operation. This has enhanced the cost
awareness of the unit. The model can also be used for simulation. It can be used to find out
the profitability of the operation of the factory.
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Mechanical Engineering