Activity Based Costing (ABC) A Proposed Costing Model for Phosphate Industry Jordan Phosphate Mines Company as a Case Study

Khalid A. Abdullah, Marwan Irshaidat


This research paper aimed at proposing a costing model to replace the current cost accounting system at Jordan Phosphate Mines Company (JPMC) in light of the encouraging benefits of Activity Based Costing (ABC). More accurate cost information results are obtained from ABC than from the traditional cost accounting systems, because ABC logic relies on the relationship of 'cause and effect' when allocating indirect costs rather than on only volume-based allocation. Previous results of some ABC studies showed that  its implementation usually led to reduction in costs and improved efficiency in production by decreasing non value added activities. Traditional cost accounting systems have been under constant criticism due to the distortions in costing coming from the inability to accurately and fairly allocate indirect costs. Advantages of this modern costing system encouraged the researcher to propose a model that is based on Underlying theory.

The proposed ABC model is made up of several sub models, were linked together using Microsoft Excel, which the researcher saw as the appropriate customized tool to handle the unique requirements at JPMC and which could manage the huge amounts of data. As a result of the research, the researcher reached the conclusion that JPMC is able to implement ABC to replace the current cost accounting system. Even if implementation is not planned for in the near future, the management of JPMC ought to keep the idea alive due to the numerous strategic benefits that ABC may provide.


Activities Based Costing (ABC), Jordan Phosphate Mines Company (JPMC), Primary Activity; Secondary Activity, Cost Driver, Activity Based Manangement (A.B.M); Expense-Activity Dependence; Cost Pool; Activiy Dictionary; Excel; Model; Submodel

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