Application of activity-based costing in estimating the costs of manufacturing process

• Main Authors: Jiran, Nur Syamimi, Gholami, Hamed, Mahmood, Salwa, Mat Saman, Muhamad Zameri, Mohd. Yusof, Noordin, Draskovic, Veselin, Jovovic, Radislav
• Format: Article
• Published: Vilnius University 2019
• Subjects: TJ Mechanical engineering and machinery
• Online Access: http://eprints.utm.my/id/eprint/87791/; http://www.transformations.knf.vu.lt/47b/article/appl
• Institution: Universiti Teknologi Malaysia

Membrane technologies are known as one of the sustainable solutions in treating wastewater from the manufacturing industry to maintain an ecosystem for the future generation. Various studies had explored this technology in terms of the economic aspects, mainly focusing on a certain process and/or only costs such as investment cost, energy cost, and operation cost. This study concentrates on developing a methodology for estimating the total cost of the manufacturing process for the hollow fiber membrane module (HFMM) by using activity-based costing (ABC) technique. ABC was used due to its capability to calculate the overhead cost and generate the information that contributes to improving the overall production activity. Based on the ABC analysis, the overhead cost is RM0.49, while labour and material costs are RM222.97 and RM0.63, respectively. The analysis revealed that extrusion is the highest cost activity and space is the highest resource consumed. Pareto chart and value analysis were employed to determine the areas that need improvement to increase production effectiveness and reduce the total cost further. The research findings conclude that the cost to produce a HFMM is consider cheap, but it can further reduce by eliminating some unnecessary activities.