Traditional and Activity Based Aggregate Job Costing Model

In this paper, two new optimization models for Activity Based Costing (ABC) and Traditional costing techniques in the manufacturing field within a job shop manufacturing environment will be considered. The two models take into consideration the bi- directional relationship between hourly rates and annual hours on each machine. Previous works considered the hourly rate as a constant number and did not take into consideration the variation in hourly rates as total annual work hours change. The two models will be applied to a case study from a local manufacturing firm and compared to determine the suitability of each cost model to the job shop environment.