Abstract
Calculation of product costs is the source of information on the costs of selected produced products with great explanatory power. In current practice, the overhead costs on farms are monitored and calculated by species. They are allocated using an allocation base (average state of the animals, harvested area in hectares) or are converted using direct costs of the activity as an allocation base. With the current high level of overheads, this method cannot be considered effective. Only type classifications are monitored and are therefore anonymous in relation to activities. We consider high overhead costs as a good reason for implementing and using the methods of Activity Based Costing. In this paper we present a proposed model of Activity Based Costing for its use in agriculture, created in MS Excel. We create the model as a basic version, which can be more closely defined depending on the particular conditions of the business implementing the model. We complete the general model for better illustration with figures on costs. We present a comparison of model results with the traditional approach of calculating costs in agriculture. One of the biggest benefits of the ABC system is the binding of costs from accounts, activities performed and the cost of products in one system. We present a statistical comparison of model results with the traditional approach of calculating costs in agriculture.
Highlights
Information is a prerequisite for any management activity
One of the biggest benefits of the activity‐based costing (ABC) system is the binding of costs from accounts, activities performed and the cost of products in one system
We presented a design for the ABC model in MS Excel
Summary
Information is a prerequisite for any management activity. Rapidly and correctly addressed information inside the company is an important basis for its effective management. One requirement is more accurate calculations of product costs. Clarification involves removing differences in the allocation of overhead costs and the replacement of a distorted image with a true picture based on the causal connections arising from real resource consumption. Calculation of product costs is an important part of the company’s information system (Tóth et al, 2016). It is the source of information on the costs of selected produced products with great explanatory power (Kubicová and Habánová, 2016)
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.