Design of activity-based costing in a small company: A case study

Activity-Based Costing (ABC) has been successful in large scale industries for improving the operational performance by providing appropriate and accurate information on the consumption of resources. However, ABC has not received a significant attention from small companies inspite of the fact that it has an important role to play in improving the performance of them. Realizing the application of ABC in small companies, an attempt has been made in this paper to study the application of ABC in a small company, viz. G.E. Mustill (GEM) Company Ltd that produces machines for photo framing industry. The project aims to develop an ABC system that will produce more accurate cost information of a ‘Four Head Foiler’, and provide information to a make or buy decision about different parts of the machine and to Activity-Based Management (ABM).