IJTC Ilomata International Journal of Tax & Accounting P-ISSN: 2714-9838; E-ISSN: 2714-9846 Vol. 1 No. 4 October 2020 pp.179-184 https://www.ilomata.org/index.php/ijtc 179 | Ilomata International Journal of Tax and Accounting Vol. 1 No. 4 October 2020 Application In Activity Based Costing (ABC) Calculation Of Home Development Cost (Study on Housing in Sidoarjo) Hendra Dwi Prasetyo1, Kusuma Adi Rahardjo2, Iman Supriadi3 Nindya Kartika Kusmayati4, Moh Wahib5 12345Mahardhika Surabaya High School of Economics correspondent: hendra_prasetya@ymail.com Submitted : August 3, 2020 Revised : September 25, 2020 Published : October 30, 2020 ABSTRACT Activity based costing (ABC) is an improved system of the traditional one. This system is calculating costs that provide accuracy and relevance in allocating overhead costs. This system has an overall cost tracking compared to traditional systems. This research uses a descriptive method of case study approach, which can describe the existence of a variable, symptom or condition. Using this method adjusts the ability to answer the problem under study and hopes to be able to provide clear results and answers. The results of the calculation of housing construction cost using the ABC system on housing in Sidoarjo are able to describe results more accurately and do not cause distortion of costs. Keywords : production cost, traditional systems and ABC systems INTRODUCTION Every company always calculates profit in production. To achieve company goals in general need to pay attention to company policy. To be able to achieve the company's goals in increasing profits, companies must properly pay attention to the costs incurred for production and determining the selling price. Mismatched selling prices can affect the company's finances. Marketing is not optimal and the amount of inventory will have an effect on company revenue. The role of production cost is very important in determining the selling price of the product. Calculating production cost is all production costs used to process raw materials into finished goods within a certain period. The cost of production is the basis for determining selling prices and profits and as a measurement tool. Activity based costing is an improved system of the traditional one, this system is calculating costs that provide accuracy and relevance in allocating overhead costs. This system has an overall cost tracking compared to traditional systems. The growing business as it is today is not only limited to the benefits of ABC for information on production costs but also as a concept that is broadly interpreted as information to motivate personal in improvising the process to produce products or services for customers. This system is useful for overcoming the weaknesses of traditional systems made specifically by industrial companies in Martusa et al. (2010). Research conducted by Joseph et.al. (2019) had given result, that modern costing such as Activity Based Costing systems can optimize the benefits of techniques that enable them to identify, accumulate and manage the costs of company activities to ensure accuracy in decision making and produce business excellence and customer satisfaction. Al-Saidi's research (2014) results are the need for multi item success steps because they capture individual perceptions more efficiently, unlike single item sizes that do not measure the complex nature of ABC system https://www.ilomata.org/index.php/ijtc mailto:hendra_prasetya@ymail.com Application In Activity Based Costing (ABC) Calculation Of Home Development Cost (Study on Housing in Sidoarjo) Prasetyo, Rahardjo, Supriadi, Kusmayati, & Wahib 180 | Ilomata International Journal of Tax and Accounting Vol. 1 No. 4 October 2020 success, multi items use composite scores to measure and analyze success by providing the biggest explanation of the factors determining the application of ABC. There is also research by Farzaneh et.al. (2010) show the results that cost of goods sold is not consistent with the rigidity of the cost model, but in general, administrative and sales costs are inherent in changes in the level of sales. Furthermore, Haneda and Azizah's research (2018) shows the results that the room rent cost determined by management is determined by allocating operating costs to each room type based on the percentage of income. At present, in calculating goods manufactured cost, the company uses a traditional system, where all costs are not directly allocated to the product on an allocation basis. All allocations are costs that are triggered due to the relationship of production volume. Based on the explanation above, it can be understood how important it is to use the ABC system in calculating the cost of production. According to Mulyadi (2012) cost accounting is an information system that produces company operating costs and information that is used as a basis for measuring, analyzing, reporting and making decisions. According to Supriyono (2012) accounting cost is a cost information generated by company management as a basis for management decisions in achieving company goals (Wiguna, 2017). Costs are the basic price or part of which is used or consumed to obtain income (Sunarto, 2004 & Rahmadani et.al. 2016). Costs represent the sacrifice of economic resources to obtain goods / services that are useful for the present or the future (Siregar, 2013 & Siby et.al. 2018). The grouping of costs over all existing cost elements into certain groups that are more concise and can provide more concise and important information is called cost classification. Commonly used in the classification of costs related to products, production volumes, departments and cost centers, accounting periods, decision making (Siby et.al. 2018). According to Carter (2102) the cost classification is based on (Palupi et.al. 2016): (1) costs with products that include manufacturing costs and commercial costs; (2) production volumes which include variable costs, fixed costs and semi-variable costs; (3) production department which includes the department of production, services, joint and joint costs; and (4) accounting period and a decision. The method of determining the production cost is how to calculate the cost element into the cost of production (Mulyadi, 2012). The production cost includes all direct materials, direct labor and factory overhead incurred to produce goods / services (Lasena, 2013). Activity Based Costing System is an approach to determining product costs that impose costs on products / services based on resource consumption caused by activities (Blocher et.al., 2011). The basis of this approach is that the company's products / services are carried out by the required activities and activities using resources that cause costs. Resources are charged to cost objects based on their usefulness (Haneda et al. 2018). METHODS This study is using a descriptive method of case study approach, which can describe the existence of a variable, symptoms or circumstances. Using this method adjusts the ability to answer the problem under study and hopes to be able to provide clear results and answers. This study focuses on the housing construction cost according to management and calculation of the cost of housing construction using the ABC system. Application In Activity Based Costing (ABC) Calculation Of Home Development Cost (Study on Housing in Sidoarjo) Prasetyo, Rahardjo, Supriadi, Kusmayati, & Wahib 181 | Ilomata International Journal of Tax and Accounting Vol. 1 No. 4 October 2020 RESULTS AND DISCUSSION Calculation of the Building Cost a House by Company Determination of development cost carried out by the company that is using a traditional system, this system uses unit-level drivers. The calculations are as follows: Table 1. Land and Construction Costs (Main Costs) Number House Type Land Cost Construction Costs Total 1 Home Office Type-58/90 77.647.208 133.400.000 211.047.208 2 Type-38/90 77.647.208 95.000.000 172.647.208 3 Type-50/91 78.509.955 125.000.000 203.509.955 4 Type-70/120 103.529.611 210.000.000 313.529.611 5 Type-70/135 116.470.812 210.000.000 326.470.812 Source: housing data in Sidoarjo Table 2. Utility Costs (Overhead Costs) Number Cost Type Total 1 Land Planning Costs 17.557.029.500 2 Infrastructure Costs 11.000.000.000 3 Electricity cost (PLN) 1.228.000.000 4 Environmental Facility Fee 2.640.000.000 5 Building Planning Costs 100.000.000 6 Licensing Fees 983.200.000 7 Project Office Administration Costs 3.840.000.000 Total cost 37.348.229.500 Number of housing units and Home Office 564 Unit Total Cost per Unit 66.220.265 Source: housing data in Sidoarjo Table 3. Calculation of Cost of Building Houses Number Cost Type Home Office Type- 58/90 Type- 38/90 Type- 50/91 Type- 70/120 Type- 70/135 1 Land Cost 77.647.208 77.647.208 78.509.955 103.529.611 116.470.812 2 Construction Costs 133.400.000 95.000.000 125.000.000 210.000.000 210.000.000 3 Utility Costs 66.220.265 66.220.265 66.220.265 66.220.265 66.220.265 Total 277.267.473 238.867.473 269.730.220 379.749.876 392.691.077 Source: housing data in Sidoarjo Calculation of the Cost of House Construction Based on the ABC System Determination of housing construction basic cost with the traditional system as stated above does not provide accurate information because it causes distortion between types of houses. ABC system is one method that can produce accurate information because there is a charge for each activity. The calculations are as follows: Table 4. Utility Costs (Overhead Costs) Number Cost Type Total 1 Land Planning Costs 17.557.029.500 2 Infrastructure Costs 11.000.000.000 3 Electricity cost (PLN) 1.228.000.000 4 Environmental Facility Fee 2.640.000.000 5 Building Planning Costs 100.000.000 Application In Activity Based Costing (ABC) Calculation Of Home Development Cost (Study on Housing in Sidoarjo) Prasetyo, Rahardjo, Supriadi, Kusmayati, & Wahib 182 | Ilomata International Journal of Tax and Accounting Vol. 1 No. 4 October 2020 Number Cost Type Total 6 Licensing Fees 983.200.000 7 Project Office Administration Costs 3.840.000.000 Total Cost 37.348.229.500 Source: housing data in Sidoarjo Table 5. Activity Identification Number Cost Type Activity 1 Land Planning Costs Batch Level 2 Infrastructure Costs Batch Level 3 Electricity cost (PLN) Batch Level 4 Environmental Facility Fee Batch Level 5 Building Planning Costs Product Level 6 Licensing Fees Product Level 7 Project Office Administration Costs Product Level Source: processed data Table 6. Grouping of Costs to Activities Number Cost Type Total 1 Unit Level Activity Costs Electricity cost (PLN) 1.228.000.000 Total 1.228.000.000 2 Batch Level Activity Costs Land Planning Costs 17.557.029.500 Infrastructure Costs 11.000.000.000 Environmental Facility Fee 2.640.000.000 Total 31.197.029.500 3 Product Level Activity Costs Land Planning Costs 100.000.000 Licensing Fees 983.200.000 Project Office Administration Costs 3.840.000.000 Total 4.923.200.000 Source: processed data Table 7. Determination of Drivers for Activities Number Cost Type Activity 1 Land Planning Costs Land area 2 Infrastructure Costs Land area 3 Electricity cost (PLN) Number of units 4 Environmental Facility Fee Land area 5 Land Planning Costs Building Area 6 Licensing Fees Building Area 7 Project Office Administration Costs Building Area Source: processed data Table 8. Calculation of Activity Group Rates Number Cost Type Cost Driver Pool Rate 1 Unit Level Activity Costs Electricity cost (PLN) 1.228.000.000 564 unit 2.177.305 2 Batch Level Activity Costs Application In Activity Based Costing (ABC) Calculation Of Home Development Cost (Study on Housing in Sidoarjo) Prasetyo, Rahardjo, Supriadi, Kusmayati, & Wahib 183 | Ilomata International Journal of Tax and Accounting Vol. 1 No. 4 October 2020 Land Planning Costs 31.197.029.500 60.541 M2 Effective Land Area 515.302 Infrastructure Costs Environmental Facility Fee 3 Product Level Activity Costs Land Planning Costs 4.923.200.000 28.040 M2 Effective Building Area 175.578 Licensing Fees Project Office Administration Costs Source: processed data Table 9. Calculation of the Cost of Building Houses with the ABC System Number Total Cost Home Office Type-58/90 Type-38/90 Type-50/91 Type- 70/120 Type- 70/135 1 Land Cost 77.647.208 77.647.208 78.509.955 103.529.611 116.470.812 2 Construction Costs 133.400.000 95.000.000 125.000.000 210.000.000 210.000.000 3 Utility Costs Unit Level 2.177.305 2.177.305 2.177.305 2.177.305 2.177.305 Batch Level 46.377.222 46.377.222 46.892.524 61.836.296 69.565.833 Product Level 10.183.509 6.671.954 8.778.887 12.290.442 12.290.442 Total 269.785.244 227.873.689 261.358.671 389.833.654 410.504.392 Source: housing data in Sidoarjo Table 10. Comparison of Company Calculations with ABC systems Number House Type Traditional ABC System Gap Percentage 1 Home Office Type-58/90 277.267.473 269.785.244 -7.482.229 -3% 2 Type-38/90 238.867.473 227.873.689 -10.993.784 -5% 3 Type-50/91 269.730.220 261.358.671 -8.371.549 -3% 4 Type-70/120 379.749.876 389.833.654 10.083.778 3% 5 Type-70/135 392.691.077 410.504.392 17.813.315 4% Source: housing data in Sidoarjo CONCLUSION The results of the calculation of housing construction cost using the ABC system on housing in Sidoarjo are able to describe the results more accurately and do not cause distortion of costs. This system can improve decision making planning so that it can help management in improving its financial planning. REFERENCES Al-Saidi, Shafeq Hamoud., & H. Nanje Gowda. (2014). Measures for Activity Based Costing Success: A Review, International Journal of Research in Commerce, IT and Management, Vol.4, Issue No.5, May, pp. 10-13. 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