Application of the Activity Based Costing System to the Wood Industry

Daniel Petru Vârteiu () and Cristian Florin Bota ()
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Daniel Petru Vârteiu: “1 Decembrie 1918” University of Alba Iulia
Cristian Florin Bota: “1 Decembrie 1918” University of Alba Iulia

Ovidius University Annals, Economic Sciences Series, 2016, vol. XVI, issue 1, 622-627

Abstract: Traditional costing methods assign indirect costs evenly, according to resource consumption by a product, while this consumption actually takes place in an uneven manner. To avoid such errors, entities seek to ensure best possible appraisal of uneven resource consumption, and the ABC method is one way of achieving this goal. The ABC method starts from the observation that it’s not products that consume resources but activities, and the entity’s activities are used by products. Costing through this method requires taking the following steps: identification of activities, assessment of resources consumed by each activity, determination of cost drivers and calculation of unit costs for each driver, and allocation of activity costs for each cost object.

Keywords: ABC method; activities; drivers; costs; expenses (search for similar items in EconPapers)
JEL-codes: M41 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:ovi:oviste:v:xvi:y:2016:i:1:p:622-627

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