The use of GUT matrix in conjunction with ABC costing method: application in a clothing company

Abstract

It is usual for small and medium sized family organizations to not have a clear business vision, therefore hampering their management, specially financially. This articles objective was to apply the ABC method costing on a small business organization in the garment sector and relating them to the GUT principles matrix in order to identify possible constraints to the product transformation process. The ABC application was aimed to the comparison analysis between the actual price charged and the calculated costs due to the method application, thus displaying the restrictions detected by the GUT array. So, it was seen that the essential activities such as "Meeting the client" and "Buying raw materials" may undergo relevant improvements to costs reduction. Regarding the GUT analysis, the data collected at the business organization specified the restrictions that needed better monitoring, such as: lack of material event and machinery breakdowns, which may thwart the process execution. In essence, this paper contribution is related to the applied ABC method along with the GUT tool, allowing the company to find out its main restrictions.