THE IMPLEMENTATION OF ACTIVITY BASED COSTING FOR PRICING DECISION IN ETEK CAFE PADANG

Abstract

The main objective of this study is to help the management of Etek Cafe in pricing decision using activity based costing. Currently, the management of Etek Cafe is using the traditional method in pricing decision. Whereas, the traditional method leads to the distortion of a price of a product such as under-cost and over-cost. Activity based costing is designed to overcome the distortions of traditional method. This study is using a descriptive qualitative analysis approach where the objective is to describe systematically calculation the production costs using traditional method and activity based costing for pricing decision in Etek Cafe Padang. The data analysis are through four stages: calculation the production costs using activity based costing method, calculation the production costs using the traditional method, the comparison of the results using traditional method and activity based costing, and the pricing decision before and after profit. The results of production costs using activity based costing and traditional method are overcost after profit. Etek Cafe get loss about Rp 16.557,11 caused by the non added value materials of Indomie Goreng and Indomie Rebus. The recommendation for future research may add another factor that influence pricing decision analysis such as competitor and costumers. In addition, for future research may add another Cafe in different city as the comparison.