Advanced Search
MyIDEAS: Login to save this paper or follow this series

A modern approach on modeling the cost behavior by ABC/ABM method

Contents:

Author Info

  • Iacob, Constanta
  • Giurca Vasilescu, Laura
  • Dracea, Raluca

Abstract

The article intend to prove that the traditional methods of cost calculation do not correspond anymore to the actual principles imposed by the global economical competition which is focused more likely on the structure expenses, the conception period, the information sources and the value. The ABC method, the most popularized of all administration methods, presents the advantage of identifying the places where is found the origin of the waste, which are the activities with a low added value, where are located the unused capacities and how the costs are constituted. Adapted to the requirements of the Romanian economy, the ABC method can be applied in two stages, which are presented in the paper. There were identified the activities, the processes and the products and inside them, we proceeded to the modeling of the cost behavior, modeling which includes the EAD and APD concepts. The peculiarity of the method applied in the Romanian enterprise is that through the processing information, there can be determined the production cost for every line production, every activity, every floor, on the time unit (minute or hour) and on the product, as it is mentioned. By studying the specialty literature, we noticed some opinions regarding the possibility of integrating the ABC method with EVA, an aspect which is not possible, for now, to be applied to the studied enterprise. EVA remains an indicator for presenting financial performances through a new perspective, being useful especially for firms that perceive the capital as a source of funds without any costs and where the financial results are measured just through some profit indicators. The conclusion is that the utility of the method in taking strategic decisions regarding the selling cost and the best fabrication quantities remains uncertain because there can not be attached the principles of determining the breakeven point or the marginal contribution as long as the method does not allow the grouping of fixed and variable expenses. The solution could consist on developing a mixed alternative method which takes into consideration the activities behavior through which could be identified the cost of some specific activities that can allow determining the profitability of each product.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://mpra.ub.uni-muenchen.de/11272/
File Function: original version
Download Restriction: no

Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 11272.

as in new window
Length:
Date of creation: 28 Oct 2008
Date of revision:
Handle: RePEc:pra:mprapa:11272

Contact details of provider:
Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC

Related research

Keywords: cost; value; activities; process; performance; Romanian enterprise;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:11272. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.