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Activity based costing to improve efficiency in aircraft engine maintenance shop : a case study of PT NTP, Bandung, Indonesia

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This research will discuss about the implementation of Activity Based Costing system into the Maintenance Repair and Overhaul (MRO) business.nActivity-Based Costing (ABC), a costing system that has recently gained popularity is based on a simple idea: in an enterprise, overhead (or operating)nexpenses are generated by a number of activities needed to successfully perform manufacturing and business processes.nABC can serve as a useful information system to support effective decision-making processes related to quality initiatives. The information provided bynABC can help identify the divers of quality and cost problems by highlighting the quality-related non-value-added activities, which can therefore facilitate quality improvement for efficiency.nPT NTP is faced with the challenge to find the true cost. Cost Paradigm almost 75% of the cost is allocated based on direct labor: High support costn(15% for NTP) shared direct cost to common facility cost such as machine shop, tools & Equipments, procurement, engineering and high overhead costn(60% for NTP) to customer service, marketing cost, pre and post sales support, HR, depreciation and other overhead cost.nAs a results, it cause difficult to find the true cost of service, wrong profitability of customer contracts due to wrong pricing which are related to poor accountability because of lack of understanding of true cost and profitability for performance improvements, and wrong decisions.nThe summarized of the finding from the ABC analysis in PT NTP shows that some products of GE CT7-5-7-9, GARRET TPE 331-10, RR TAY 650-15, GEnPGC CT7-9 and PW PT6A/T engines constribute to possitive gross profit. But still in some of specific product the company should review the usage of Man-nHours because those create some losses. More specific the company should pay particular attention to avoid re-work especially because ot the high rate on the Testing process.nThese efforts appear to be more attractive under the ABC system that can direct the Company to improve their effiency in order to improve their Qualitynof product and the cost absorb to it.

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Availability

M00165

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Available

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Series Title

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Call Number

165

Publisher

: Swiss German University., 2010

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Language

English

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Subject(s)

MBA

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