An Approach to Cost Management with Applying Activity-Based Costing of a Construction Retail Business in Amnat Charoen

Abstract

        This research aims to propose an approach to effective cost management of construction retail businesses by applying adapted activity-based costing and analyzing key activities in inventory-related processes. Data collection involves three sources of data: secondary data, in-depth interview, and participant observation with an application of the time function mapping tool, in a company in Amnat Charoen province. The research engages data analysis consisting of activity-based costing model, value analysis, and working processes. The finding suggests that wastes in activity process including waiting time, overlapped works from different departments, and non-value added activities, were estimated an additional margin cost of 2.05% to 5.44% of price per unit. Moreover, the findings point out that inefficient working layout, unawareness of first in first out principle, and dead stock also play a critical role in this research. Therefore, this research proposes strategic approaches for construction retail business not only to reduce costs but also to increase revenue by eliminating non-value added activities and revamping other necessary activities, transforming workflows into modern trade style, adjusting a layout management, raising awareness of appropriate product flows, and converting depreciated items into goods sold and reusable operating materials instead of expendable ones.