engleski

Movement from Traditional to Modern Cost Accounting Methods in Manufacturing Companies

Significant changes in business environment at the end of 20th century and the beginning of 21st century enable the development and application of modern cost accounting methods which main purpose is to give required information to management regarding the effectiveness of certain products, projects, activities, consumers, responsibility centres etc. Traditional cost accounting methods were developed in the middle of 20th century due to the automation of production. The focus of traditional cost accounting methods was on manufacturing cost and ways of indirect manufacturing costs allocation to products or services. But, further development of technology, changes in consumer’s preferences, global competition face modern manufacturing companies with permanent challenges of survival at the global market. Traditional cost accounting methods are no longer appropriate in modern business conditions, because cost accounting methods should indicate the potential areas in companies where are possible cost savings. Therefore, modern cost accounting methods are focused on cost rationalization and cost reduction, since modern manufacturing companies cannot effect on market prices but can effect on their costs. In current business conditions, modern cost accounting methods are more appropriate while they are focused on the total costs through the whole product life cycle. This paper deals with the modern cost accounting methods and their application in manufacturing companies. The results are showing that modern cost accounting methods enables more confidential determination of the real product profitability. But it is also important to state that research results show that modern cost accounting methods should be applied together with traditional cost accounting methods. Traditional cost accounting methods give information regarding cost in short term, while modern methods are orientated on longer period (e. g. on the whole product life cycle).

traditional cost accounting methods ; modern cost accounting methods ; ABC ; target costing ; life cycle costing ; product profitability

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