• Coiler—Application of Activity-Based Costing

Abstract

Coiler is a manufacturer that specializes in producing and selling cellular repeaters. Its early establishment coincided with the opening of Taiwan’s telecommunications market. The new telecommunications industry was more consumer-centric, thereby increasing the demand for improvement in indoor reception quality and leading to high sales growth for Coiler and its competitors. However, after 2002, market saturation led to limited increases in Coiler’s sales and decreases in gross and net profit margins. At the end of 2004, the founder of Coiler started to consider whether the company should re-examine its calculation method for determining product costs. This case study can help students to understand how Coiler mitigated traditional cost distortions through activity-based costing by analyzing the differences in product costs between traditional costing and activity-based costing techniques.

Keywords: Activity-Based Costing, Traditional Costing, Product Cost, Cost Distortion