BENEFITS OF INDIRECT COSTS ALLOCATION WITH COST DRIVERS

Delia Manea () and Mircea Barbu ()
Additional contact information
Delia Manea: Spiru Haret University, Faculty of Management,Brasov, Romania
Mircea Barbu: Spiru Haret University, Faculty of Management,Brasov, Romania

Review of General Management, 2012, vol. 15, issue 1, 212-220

Abstract: Due to the technological developments that has occurred in recent years within the business entities, the cost structure was affected, so that the largest share of the production cost is held by the indirect cost. Traditional management accounting and cost calculation methods allocate indirect cost based on an item which serves as a criterion, key or core distribution. The allocation of indirect cost has the disadvantage of an arbitrary distribution, depending on some basis subjectively chosen. The ABC method allocates indirect cost directly to products starting with the activities done for their production rather than through some inaccurate and arbitrary quotas, thus achieving a relevant production cost. The paper will present models of allocating indirect costs to products, both through traditional management accounting and cost calculation methods and with cost drivers.

Keywords: indirect cost; Activity-Based Costing (ABC) method; cost driver (search for similar items in EconPapers)
JEL-codes: M41 (search for similar items in EconPapers)
Date: 2012
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.managementgeneral.ro/pdf/1_2012_19.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fmb:journl:v:15:y:2012:i:1:p:212-220

Access Statistics for this article

Review of General Management is currently edited by Camelia Stefanescu

More articles in Review of General Management from Spiru Haret University, Faculty of Management Brasov Contact information at EDIRC.
Bibliographic data for series maintained by George Maniu ( this e-mail address is bad, please contact ).