Abstract

Establishing product prices is a common practice in any business. This process has a direct impact on the company's profits, and it is also a major consideration for customers when selecting suppliers. Most businesses only determine the worth of goods sold based on data from the accounting department, which means that the cost is based on the expenses incurred. This technique is only useful for cost management and does not help with planning or calculating order values prior to contracting. Generally, businesses set order prices based on their experience and with an allowance for redundancy costs. Utilizing this method to calculate the price offer may be detrimental to the business, as it may end up spending more or not having a competitive edge if the high provisioning cost is used as the high price offer. Some studies have proposed efficient and precise pricing methods. Activity-Based Costing (ABC) is one of the most successful valuation techniques to date. This research proposes the use of this model in a make-to-order knitting workshop. Constructing an Activity-Based Costing model enables the company to identify costs that traditional valuation methods cannot, thereby allowing for more precise cost calculations and providing the company with a clearer understanding of the cost origins and aiding decision-making. This paper compiles data on production activities, resources, and expenses and assigns costs to individual activities. This model is able to calculate the product cost based on the company's current production conditions. Additionally, a tool is proposed to generate data tables with Excel to update information and compute for various orders.