It can be difficult estimating all of the cost components that are attributed to a machined part.  This problem is more pronounced when a factory uses group technology manufacturing cells as opposed to a functional or process layout of a job shop.  This paper describes how activity-based costing (ABC) concepts can be integrated into a discrete-event simulation model of a U-shaped manufacturing cell producing a part family with four members.  The simulation model generates detailed Bills of Activity for each part type and includes specific information about the cost drivers and cost pools.  The enhanced model output can be used for cost estimation and analysis, manufacturing cell design, part scheduling and other manufacturing decision processes that involve economic considerations. Although the scope of this effort is restricted to a small scale manufacturing cell, the costing concepts have general applicability to manufacturing operations at all levels.