| X Inc. is a company engaged in manufacturing of metal construction industry for the benefit of heavy equipments. X Inc. is facing giant competirors, and to win the competition, X Inc. has to face big challenges. Efficiency is the key for the X Inc. to do survive. The one thing needed is how to determine the appropriate budget, based on the company needs on these present days. The budgeting process which supports the company is the Activity-Based Budgeting (ABB) system. Based on the main problem identification, the formulation of the main problem is “how does the implementation of ABB, as a new planning and budgeting system, gain benefits for the company?” The ABB system compiles the budget based on the costs of activities, and links the resources required to the activities. The ABB system tries to define the clear correlation between resources consumed and the outputs, and the clear correlation between the activities, costs, and outputs while changes being occured. The ABB pays direct attention to the costs expected to run activities. ABB facilitates the continuous improvements. The process in serving a budget based on ABB highlights the opportunities of costs reduction and the elimination of the prodigal activities. ABB facilitates the identification of non-value-added activities and eliminates them. In the data processing section, the principal business process was identified, i.e. “manufacturing of the heavy equipment components.” Based on the business process, there are four main activitities indentified, i.e. “serving the customer’s order”, “manufacturing of plate”, “manufacturing of bracket”, and “procuring the raw and auxiliary materials in order of production.” The business process and the four activities then being decomposed into the more detailled activity units using the IDEF 0 diagrams. The next step is allocating the overhead costs onto the four main activities, onto the products, onto the decomposed activities, and onto the existing department in the company. At last, the improvements of the business process being occured by compiling the proposed process business. By decomposing the business process and allocating the costs, then the ammount of resources required to run the process (costs and manhour) were identified. By improving the business process, some benefits of ABB preparation are gained, they are business process mappings, cost reduction (5,43% off the actual), manhour reduction (4,13% off the actual), efficiency, and more control power in the company’s decision making process. |