A case study of activity-based costing in allocating rebar fabrication costs to projects

Yong Woo Kim, Seung Heon Han, Sungwon Shin, Kunhee Choi

Research output: Contribution to journalArticle

9 Citations (Scopus)

Abstract

How to improve cost allocation for reinforced steel bar (rebar) is an ongoing topic of debate among construction manufacturers and contractors. Traditionally, many fabrication shops have used a single overhead-cost pool accounting system. However, a new costing method, activity-based costing (ABC), may provide more advantages than the traditional system. In this case study, a single overhead-cost pool system is compared with the ABC method to demonstrate how ABC improves cost allocation and provides other benefits. The case study findings indicate that ABC provides such benefits as (1) accurate manufacturing costs; (2) cost information on processes; and (3) information on cost drivers. This paper also bridges the construction and cost accounting literature. Our study contributes to the construction management literature by offering a different cost allocation method to refine fabrication costs assigned to projects. The findings are expected to serve as a reference for industry professionals who recognize the shortcomings of a traditional single overheadcost pool system and are in need of a more accurate costing system.

Original languageEnglish
Pages (from-to)449-461
Number of pages13
JournalConstruction Management and Economics
Volume29
Issue number5
DOIs
Publication statusPublished - 2011 May 1

Fingerprint

Fabrication
Steel
Costs
Cost accounting
Activity-based costing
Cost allocation
Contractors
Overhead costs
Costing
Industry
Information costs
Construction management
Manufacturing cost
Accounting systems
Cost drivers

All Science Journal Classification (ASJC) codes

  • Building and Construction
  • Management Information Systems
  • Industrial and Manufacturing Engineering

Cite this

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A case study of activity-based costing in allocating rebar fabrication costs to projects. / Kim, Yong Woo; Han, Seung Heon; Shin, Sungwon; Choi, Kunhee.

In: Construction Management and Economics, Vol. 29, No. 5, 01.05.2011, p. 449-461.

Research output: Contribution to journalArticle

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