Production function in the cost accounting approach and managerial applications
Production function in the cost accounting approach and managerial applications

Summary/Abstract: Cost accounting is among other things a quantitative description of the manufacturing processes. Using algebraic notations of variables appearing in cost accounting one can describe production by function of many arguments. Considerations lead to the finding of two important factors, namely labor productivity and variable of management. The last variable is parallel to the concept of total factor productivity (TFP) well known in econometrics research. These two factors serve for cognitive aims and are useful for solv-ing some management problems. One of the significant problems is the determination of an adequate level of compensation in accordance with economic performance. This paper presents an accounting concept of the production function and methods of controlling compensation according to data presented in financial statements. The procedures are applied to real company data.

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