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ABSTRACT In determining the cost of products, traditional cost accounting system is less appropriate to apply again in the era of modern technology such as this. Because this system has some weaknesses.
Among them is giving a distorted cost information. Distortion occurs due to inaccuracies in the cost of loading, resulting in errors costing, decision making, planning, and control. The distortion also resulted undercost / overcosted the product ( Hansen & Mowen, 2004). The existenc e of these weakness es can be ov ercome with the use of Activity Based Costing method. Companies can use a system of Activity Based Costing ( ABC ) to analyze the activity. ABC is an innovative application of one of which is to reducing activities that do not add value, add value to products / services to be produced, and eliminate activities that do not comply with the wishes of the customer, or that do not create value.
Activity Based Costing is a method of determining the cost of the tracing costs to activities and then to products. The main difference between the calculation of the cost of traditional cost accounting product with ABC is the amount of cost driver (the cost driver ) used in the ABC method more than the traditional cost accounting systems.
Companies can use a system of Activity Based Costing ( ABC ) to analyze the activity. ABC is an innovative application of one of which is to reducing activities that do not add value, add value to products / services to be produced, and eliminate activit ies that do not fi t with the wishes of the customer, or that do not create value. Keywords: activity based costing, cost, cost drivers, methods, overhea d, systems, le vels of activities, production ABSTRAK.