Allocating shared costs by adopting Activity Based Costing system: an applied study at the South Refineries Company

Abstract

This paper aims to show that the use of activity based costing as a system to allocate joint costs will provide more accurate information and helps management in decision making process .The research is taking place in the south refinery for the year 2012 as a case study. The research concludes that the use of a single rate will lead to cost inaccuracy and recommended the use of more than one overhead rate to drive cost in the first and second units as well as other cost drives for sub costs for some activities.