This research adopted the case-study approach with a military shipyard set up as the object of this study. According to the work activity procedure and costing system of the shipyard, we constructed an overhead distribution plan based on the concept of Activity Based Costing (ABC). Besides, we selected monthly reports of three consecutive fiscal years (1997-1999) to make a regression analysis of the overheads and cost driver as well as to review the causality between them. This research also employed the linear programming technique of Data Envelopment Analysis (DEA) to measure the relative efficiency reflected on the activities driver involved and their corresponding outcomes of the case-study shipyard, in order to provide information for the improvement of the shipyard activities. This research has integrated approaches of ABC and DEA so it offers relevant information not only for accurate cost calculation but also for work activity improvement. In addition, it gives some principles for mangers to consider when developing strategies and helps to improve work activity management as well.