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

By Constanta Iacob, Laura Giurca Vasilescu and Raluca Dracea


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.cost, value, activities, process, performance, Romanian enterprise

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