A flexible costing system for flexible manufacturing systems using activity based costing

Flexible manufacturing systems (FMSs) are designed to integrate the flexibility of job shops and the efficiency of mass production systems. Product costing methods have to adapt to this new technological environment. On one hand, the high production overhead cost of these systems requires a special attention to overhead allocation. On the other hand, the constantly changing setup configuration and production plans require a constant recalculation of overhead allocation and an a priori estimation of the expected production cost. This paper introduces the concept of flexible costing in FMSs, and proposes a method that modifies the overhead allocation based on the results of the production plan and on the simulated performance of the process. This approach is illustrated with some numerical examples.