Journal of Business and Management

Journal of Business and Management

ISSN: 2291-1995 (Print)    ISSN: 2291-2002 (Online)

Volume 3 (2014), No. 3, Pages 8-18

DOI: 10.12735/jbm.v3i3p08

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The only Correct Calculation Method in Cost Management: From Activity Based Costing Perspective

Miroslav Škoda1  Gabriela Sláviková1  Daniel Lajčin1 

1Dubnica Technology Institute, Dubnica nad Váhom, Slovak Republic

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To Cite this Article     Article Views: 1609     Downloads: 854  Since January, 2015


In late 1980’s National Association of Accountants had introduced Activity-based costing – a cost accounting technique which charges organization’s indirect costs to the activities that cause the costs to be incurred and then distributes costs of activities to the products that cause the activities to be performed. Activity-based costing as a management tool has proved its relevance and found its proponents among academics and managers. Introduction of the time aspect into Activity-based costing proved that it is still attracting attention and undergoing development in order to become more accurate. The paramount goal of the implementation is to prove the increased effectiveness and superiority of cost management when using Activity-based costing. It will be achieved by allocation of overhead costs to products with the intention to determine unit costs. This process of allocation will increase the reliability of cost information and improve the information base for product decisions. Moreover, we expect that this approach will more or less alter the profit margin of individual products. This kind of information is very useful when evaluating price-related or keep/drop decisions.

JEL Classifications: M40, M41, M49

Keywords: ABC model, cost management, cost driver, implementation, overhead costs, direct costs, indirect costs

To Cite this Article: Škoda, M., Sláviková, G., & Lajčin, D. (2014). The only correct calculation method in cost management: From activity based costing perspective. Journal of Business and Management, 3(3), 8-18.

Copyright © Miroslav koda et al.

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This article is published under license to Science and Education Centre of North America. This is an Open Access article distributed under the terms of the Creative Commons Attribution 4.0 International License.

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The only Correct Calculation Method in Cost Management: From Activity Based Costing Perspective