Systematic approach to activity based costing of the production planning activity in the book manufacturing industry

Abstract

This paper justifies the need for moving indirect production planning costing in the book manufacturing industry toward direct production planning costing. Principles of activity based costing are utilized to accomplish this feat. This paper develops a methodology to break down the various tasks required in planning a job for production in the book manufacturing industry and to apply time measurement to these activities. These time measurements can then be used to individually cost the planning process of any book manufacturing company. The methodology is tested and justified through extensive data collection and application in a major book manufacturing firm. Thus, this industry can now effectively apply cost to activities of the planning process for each individual job as a direct cost, rather than an indirect one.