The Cost of Sukahati Chicken Processing Product Analysis

with Activity-Based Costing

Jaenudin

Sukahati Chicken Processing is a company which produces processed broil chicken

including: whole chicken, chicken parts, parting Wendy’s, parting KFC, boneless and Marinated
(spicy and mild). At present, Sukahati Chicken Processing implements the conventional method to
calculate the overhead cost of each product by dividing the overhead cost proportionally which
leads to a distortion in cost. The purpose of this study is to: (1) analyze the cost of production of
each product by activity-based costing; (2) compare the cost of production with company’s
method; (3) analyze those activities which give added values, and non-added activities also
activities which has no contribution at all in the production and (4) analyse the allocation of the
overhead cost and the level of cost efficiency of the company.
The data consist of primary and secondary data, which are of qualitative and quantitative
obtained from internal and external sources. The method used to analyze the data is Activity-
Based Costing. The results of this study indicate that the whole chicken, parting and boneless
products are overvalued by 0.02 – 0.32 % whereas the product of parting Wendy’s , KFC (ABOB
and HCC), marinated (spicy and mild) and chicken leg parting are undervalued by 0.02 – 4.18 %.
This indicates that there has been a cross-subsidy of overhead cost between the products. The
Activity-Based Costing method should be implemented in the Sukahati Chicken Processing to
determine the cost of product because the overhead cost which is allocated based on non-unit cost
has a significant percentage towards the total overhead cost.