Implementing an Integrated Activity-Based Costing and Economic Value Added System: A Case Study

This paper presents a systematic methodology for implementing an integrated Activity-Based Costing and Economic Value Added system in small manufacturing companies. In this case study, the actual implementation of this system in a small manufacturing company is presented in a step-by-step manner. This methodology begins by analyzing the company’s income and balance sheet statements. Supporting tools to estimate and trace capital cost are illustrated with the company’s actual data. Changes in product cost resulting from the inclusion of capital cost are then demonstrated. Finally, the impact of this complete, and therefore, reliable cost information on the company’s decision-making and long-term business performance is discussed.