Snachov Mykola, Candidate of Technical Sciences, Associate Professor of Department of Accounting аnd Taxation, Dnipropetrovsk National University of Railway Transport named after Academician, Dnipro, Ukraine

ORCID ID: 0000-0001-7908-0362
e-mail: snachov49@gmail.com

Lomtieva Iryna, Senior Lecturer of Department of Accounting аnd Taxation, Dnipropetrovsk National University of Railway Transport named after Academician, Dnipro, Ukraine

ORCID ID: 0000-0003-2838-3851
e-mail: irinalomteva72@gmail.com

Features of the Application of the ABC-costing System for Cost Accounting

Abstract. Introduction. In an unstable economy, it is important to improve the cost accounting system and calculate the cost of production (works, services). In countries with advanced market economies, activity-based costing has become widespread. The AWS system, in contrast to existing traditional methods, allows you to establish a cause and effect relationship between products and the costs necessary for their production, which provides a more accurate allocation of costs between the objects of calculation and a reliable estimate of the real cost of production.

Purpose. The purpose of this article is to analyze the system of calculation by type of activity (ABC-costing), characterization of its features and principles of construction.

Results. The article substantiates the feasibility of using the ABC system for cost accounting and cost calculation. The main difference between the ABC calculation system and traditional systems is the accumulation of production overhead, not on sites (units), but on processes (operations), with further dispersion by types of products involved in these operations. ABC’s product costing algorithm consists of establishing the basic processes associated with production; determination of costs for each identified process; allocation of cost carriers (drivers) for each detected process; applying cost drivers to products (cost units). The most significant advantage of using an ABC-based costing system at an enterprise is the ability to use it to manage costs and maximize business profits. For businesses whose business processes involve a large number of operations, the use of ABC calculations can provide more accurate data on cost sharing and the formation of real cost of production compared to traditional costing systems.

Conclusions. The ABC calculation system allows you to make more effective management decisions regarding cost minimization and optimization, cost estimation of certain operations, pricing and assortment policies of the enterprise. Accurate cost sharing between costing entities and accurate estimation of real cost is one of the levers of enterprise profit management and business profitability.

Keywords: activity-based costing; manufacturing overhead costs; prime costs; cost driver; profit.

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