The Implementation of Activity-Based Costing Method in Determining Selling Prices

This study aims to find out the difference between the calculation of shoe production cost using the
traditional method as compared to that using the Activity-Based Costing method. The research was conducted on
five shoes industries in the Shoes Industry Center in Cibaduyut Bandung, using such data collecting method as
observation, interview and documentation studies. The population comprises of 76 industries, and the method
used for determining the sample is purposive sampling technique. The analytical technique used in this study is
the analysis of two different averages. The results of this study indicate that there is a significant difference
between the shoe production cost calculated using the traditional method and that calculated using the ActivityBased Costing method. After applying the latter cost determining method, there turned out to be a significant
difference in the shoe production cost resulted from the inaccurate price calculation in the former method, as
here a selling price is fixed by marking-up efforts aiming to cover the production cost. Determining a selling
price in this way causes the selling price to be too low; thus it cannot optimize the profit.