PECULIARITIES AND ADVANTAGES OF THE COST CALCULATION METHOD ACCORDING TO THE TYPES OF ACTIVITIES
PECULIARITIES AND ADVANTAGES OF THE COST CALCULATION METHOD ACCORDING TO THE TYPES OF ACTIVITIES

Summary/Abstract: The method of calculating costs according to the types of activities ensures calculating the cost of unit of production more accurately. Based on that, we can improve determination of the product selling price and realization strategy, as well as effectiveness of management and quality of the decision made. - When applying this approach, it is better evident what overhead costs are spent for; - The approach of calculating cost according to the types of activities recognizes that production overhead costs are not related only to the volume of production and selling; - For many companies, production overhead costs represent a significant part of total costs. Therefore, for managing the business properly the management needs the information about what overhead costs are paid for. Control over production overhead costs can be exercised by managing and controlling of cost-driver; - Using this approach in a complex business environment allows us to determine actual costs on the product; - Calculation of costs according to the types of activities can be used not only when distributing production overhead costs but in case of distributing all types of overhead costs.

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