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The Implications Of Choosing The Method Of Cost Calculation In Relation To The Profitability Of A Product

Author

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  • Gojnea Violeta IIeana Ph. D Student

    (University of Craiova Faculty of Economics and Business Administration Craiova, Romania)

Abstract

The article presents an analysis of the rates of return of a company whose costs vary depending on the method of calculation used. The rates of return are synthetic indicators that present the profitability situation or the ability of the company to produce profit. The calculation methods used in our article are the method of general calculation and the method of calculation in stages, what makes the difference between the two is the cost. From the study case you can observe a higher cost regarding the method of calculation in stages than the method of general calculation. Calculation is a tool that links the technical and the value part of the activity of production, as means of knowledge and leadership of this activity. The calculation study gives us information about the production potential of an enterprise that depends on how it manages to recover the cost of manufacturing through retail sales and its development is conditioned by the amounts that are earned from the sales of products and by the costs of obtaining and manufacturing them. The analysis of the rates of return intends to provide information to managers, shareholders and creditors.

Suggested Citation

  • Gojnea Violeta IIeana Ph. D Student, 2011. "The Implications Of Choosing The Method Of Cost Calculation In Relation To The Profitability Of A Product," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 4(39), pages 110-117, May.
    • Handle: RePEc:aio:aucsse:v:1:y:2011:i:8:p:110-117
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    File URL: http://feaa.ucv.ro/AUCSSE/0039v4-014.pdf
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    More about this item

    Keywords

    rates of return; method of general calculation; method of calculation in stages; cost;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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