THE USE OF FIRST STAGE COST DRIVERS IS DEMONSTRATED IN THIS PAPER BY THE DEVELOPMENT OF AN ACTIVITY BASED COSTING MODEL. THE MODEL FOCUSES ON THE COST OF GAGING IN A MID-SIZE AEROSPACE MANUFACTURING COMPANY. THE ACTIVITY BASED MODEL SHOWS THE COST OF GAGING IN THE PRODUCTION ENVIRONMENT TO BE EXCESSIVE. ATTRIBUTES ARE DEVELOPED TO ANALYZE THESE COSTS. SOLUTIONS ARE DERIVED FROM A ROOT CAUSE ANALYSIS. UTILIZING A CROSS-FUNCTIONAL PRODUCT DEVELOPMENT STRUCTURE TO DEPLOY THE VOICE OF THE CUSTOMER, GAGING REQUIREMENTS ARE CONSISTENTLY DEFINED. GROUP TECHNOLOGY IS EMPLOYED IN THE PRODUCT DESIGN STANDARDS AND LATER TRANSFERRED TO THE MANUFACTURING FLOOR IN FOCUS CELLS. THE RESULTS OF THE IMPLEMENTATION ENSURE THAT CUSTOMER REQUIREMENTS ARE DESIGNED CONSISTENTLY AND INSPECTED EFFECTIVELY.