| Abstract: | Activity based costing (ABC) systems are often developed using estimated input data. A methodology based on fuzzy set theory has been developed to handle estimation imprecision and uncertainty in ABC systems. This methodology creates a new type of ABC system; a fuzzy activity based costing (FABC) system. This paper introduces the concepts behind FABC, discusses the FABC system development process, and presents a FABC system that was developed for a mid-sized pharmaceutical company. Compared to ABC analysis, the developed FABC system provides additional and more valuable decision making information to the company. |
