Activity-based management in a small company: a case study

This paper deals with the application of activity-based management (ABM) in a small company. The project took place in G. E. Mustill, a company that p roduces machines for the photo framing industry. This project aims to devel op an ABM system for the company which leads to appropriate improvement act ions based on a make or buy decision about different parts of the machine,' four-head foiler'. Firstly, a theoretical framework for the design of an AB M system is developed. Then, secondly it is used to improve the business pe rformance of four-head foiler manufacturing. The activities required to man ufacture this machine are identified and then quantified by their consumpti on of resources. The factors causing or driving the cost (cost driver) of a n activity in question have been identified and used to identify the value- adding and non-value-adding activities. Also, some suggestions are offered to improve the performance of the company using the ABM system.