Prospects of using the ABC method in economic practice of enterprises

Ihor Yaskal, Oksana Yaskal, Igor Stasiuk


Introduction. The traditional system of calculating the cost of production by the complete expenses has performed an accounting function but carries overhead (indirect) costs to the cost of certain products only in proportion to the volume of its outputs. That is why it has a number of shortcomings, which are particularly acute in market conditions: it does not provide for the distribution of costs by functions and actions, does not provide reliable calculation, the objectivity of assessment and market pricing.

Results. It has been calculated and compared the cost of the main products of the enterprise in the research (on the example of LLC "Design and Construction Company" RIKA") by the method of calculation by the complete expenses and the method of ABC. It has been established that when calculating by the complete expenses there is an insufficient share of overhead costs which refers to the cost of products produced in smaller quantities and vice versa. It has been determined that using the method of calculating the cost by the complete expenses leads to unjustified overstatement of the share of overhead costs in the cost of products with a significant share of direct labour and material costs ( namely: construction of facilities and production of concrete products) and the share of overhead costs in the cost of products with a small number of direct labour costs and materials is insignificant (namely: the production of mixtures and the development of documentation). It has been calculated relative savings of unit cost (construction of facilities, production of concrete products) from the application of the ABC method. It has been also determined that it is advisable to change the approach to the pricing of such products as the production of mixtures and the development of documentation, as their cost is higher than the accounting. This indicates the unprofitable price for the company of these products and the need for management decisions or the abandonment of these products or a change in pricing policy.

Application. The application of the ABC method in the distribution of enterprise costs could identify new benchmarks in product cost management, provided that existing accounting is adapted to this method.


costs; cost management methods; cost management model; ABC-method; enterprise

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Science Works Journal "Ekonomichnyy analiz"

ISSN 1993-0259 (Print)  ISSN 2219-4649 (Online) DOI: 10.35774/econa

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