Activity Based Costing Model for Cost Calculation In Gas Companies: Empirical Evidence of Iran

Abstract: With the reduction of public funding and the government's emphasis on accountability, output control and cost-effectiveness in the delivery of services, organizations need information to measure their activities, link their inputs with outputs, correct their pricing, and measure their performance in order to facilitate accomplishing their goals. This research is to explain the steps and the benefits of implementing Activity Based Costing (ABC) for the Iranian Gas Company. Using ABC the cost of one cub meter of consuming gas in all regions of capital was determined and compared with the results of the Traditional Costing System (TCS). Implementing ABC strongly changed company managers' prospective towards the company cost of services, provided a more effective system for company internal decision-making, improved the effectiveness of the costing system and cost management, and helped the managers to correct company pricing of services and the accomplishment of strategic goals by giving more correct cost information