The Role of Activity Based Costing on Organization Pricing System - A Case Study of Teetoo Foam & Mattress Industry, Liberia

Abstract

This study explains the costing technique of a reputable foam and mattress manufacturing company in Liberia with a view to cross check the relevance and importance of activity based costing technique on its costing operation. The researcher obtains the organization manufacturing cost data for two sizes (6 and 10 inches) of the companys product between July 2008 and June 2009. It was observed that the organization is using the traditional costing system which is volume related technique. Subjecting the cost obtained to ABC system, there is a cumulative cost savings on the companys operation.The hypothesis generated for the study was subjected to t-test analysis and the result shows that activity based costing system allows an organization to have a realistic and effective costing procedure that can enhance organization manufacturing activities.

Keywords: Costing, pricing, activity-based, volume