eported product costs and, in turn, product pricing could be reduced by using activity-based costing (ABC).
In traditional cost accounting methods, most companies have produced a narrow range of prod- ucts. Applying the same methods for a wide range of products will lead to a distorted cost informa- tion. Accurate cost information, such as the pro- duction costs and value-added activities are very important since they are used as a decision base for management and control purposes, from produc- tion to marketing. ABC aims not only to allocate overhead costs accurately, but also identifies the areas of waste. It considers that purchasing, receiv- ing, setting up and running a machine consume resources, and products consume activities. These activities trigger the consumption of resources that are recorded as costs in the accounts. This lends ABC to trace the cost of products according to the