THE COST OF PRODUCTION UNDER DIRECT COSTING AND ABSORPTION COSTING – A COMPARATIVE APPROACH

Bunea Bontas Cristina Aurora
Additional contact information
Bunea Bontas Cristina Aurora: Constantin Brancoveanu University of Pitesti, The Faculty of Management Marketing in Economic Affairs Braila
Authors registered in the RePEc Author Service: Cristina Aurora Bunea-Bontas

Annals - Economy Series, 2013, vol. 2, 123-129

Abstract: Managerial accounting has an important role in strategic management of a company, being designed especially for managers, in order to optimise their decision regarding operating activities. One of the objectives of managerial accounting is the cost calculation, for measuring inventory costs, and the costs and profitability of products and services. Cost calculation systems can vary in terms of which costs are assigned to cost objects, two significant calculation systems being adopted by the costing theory: full cost accounting, which includes all costs of production as product costs, and partial cost accounting, which includes only those costs that vary with output. This article provides a comparative approach regarding the differences between the calculation of the cost of production under direct costing and absorption costing. It also examines the implication of using each of these calculation systems on the financial position and financial performance of the companies reported on the statement of financial position and the income statement. Finally, the advantages of using direct costing for internal reporting are discussed, considering that this method is not acceptable for external reporting to stockholders and other external users.

Keywords: cost of production; direct costing; absorption costing; financial position; financial performance (search for similar items in EconPapers)
Date: 2013
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.utgjiu.ro/revista/ec/pdf/2013-02/19_Bunea%20Bontas%20Cristina.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:cbu:jrnlec:y:2013:v:2:p:123-129

Access Statistics for this article

More articles in Annals - Economy Series from Constantin Brancusi University, Faculty of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Ecobici Nicolae ( this e-mail address is bad, please contact ).