Cost measurement using Activity-Based Costing: a case study in a hotel in Rondonópolis, Brazil

Abstract

. This study analyzes the application of activity-based costing (ABC) to redistribute indirect costs in a hotel located in Rondonópolis, Mato Grosso, Brazil. An applied, exploratory, and descriptive case study combined qualitative and quantitative evidence from interviews, direct observation, financial reports, cost worksheets, and administrative records. Six activities were examined: front desk, housekeeping, laundry, food service, building maintenance, and financial administration. ABC did not change total monthly costs, which remained BRL 117,000, but substantially changed their allocation. Assigned costs decreased by 20.8% for front-desk activities, 13.7% for housekeeping, and 15.0% for maintenance, while laundry, food service, and financial administration increased by 23.3%, 14.8%, and 8.0%, respectively. The findings suggest that the traditional allocation approach overcosted some activities and undercosted others. However, the evidence does not demonstrate lower spending, higher profitability, or better pricing because the observed change is an accounting reallocation rather than a reduction in total resource consumption. ABC can improve managerial transparency provided that cost drivers, volumes, allocation rates, and subsequent decision effects are fully documented and monitored.