An implementation of activity based costing method in the service sector

Abstract

This thesis consists of an implementation of activity based costing which is the new method for cost accounting, to the service sector. Firstly, the organizational structure of the software company was analyzed and its products and resources of the products were defined. At the second step, the cost drivers which explain the relations between the resource-activity and activity-product were determined. Then the products costs were calculated by using two different ABC methods. These methods differ in cost allocation step. The first method, firstly distributes the costs to the activities, and then distributes the activities costs to the products. However, the second ABC method uses cost accumulation model which regards the relations of the activities to distribute the costs to the activities and the products. As a result of the survey which used 1996 and 1997 fiscal data, the results which help the company to know its organization more and to work more efficiently and effectively were obtained.