A case study of activity-based costing in allocating rebar fabrication costs to projects

Yong Woo Kim, Seungheon Han, Sungwon Shin, Kunhee Choi

Research output: Contribution to journalArticlepeer-review

15 Citations (Scopus)


How to improve cost allocation for reinforced steel bar (rebar) is an ongoing topic of debate among construction manufacturers and contractors. Traditionally, many fabrication shops have used a single overhead-cost pool accounting system. However, a new costing method, activity-based costing (ABC), may provide more advantages than the traditional system. In this case study, a single overhead-cost pool system is compared with the ABC method to demonstrate how ABC improves cost allocation and provides other benefits. The case study findings indicate that ABC provides such benefits as (1) accurate manufacturing costs; (2) cost information on processes; and (3) information on cost drivers. This paper also bridges the construction and cost accounting literature. Our study contributes to the construction management literature by offering a different cost allocation method to refine fabrication costs assigned to projects. The findings are expected to serve as a reference for industry professionals who recognize the shortcomings of a traditional single overheadcost pool system and are in need of a more accurate costing system.

Original languageEnglish
Pages (from-to)449-461
Number of pages13
JournalConstruction Management and Economics
Issue number5
Publication statusPublished - 2011 May

Bibliographical note

Funding Information:
The authors are most grateful to GS Engineering & Construction Company for their financial support and helpful comments. The individuals and companies conducting these experiments or providing valuable comments should be acknowledged. This research was also supported by the University of Washington’s Research Royalty Fund and Basic Science Research Program through the National Research Foundation of Korea (NRF) grant funded by the Ministry of Education, Science and Technology (2009-0081326).

All Science Journal Classification (ASJC) codes

  • Management Information Systems
  • Building and Construction
  • Industrial and Manufacturing Engineering


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