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ABSORPTION COSTING ANALYSIS AND ITS USE BY CZECH MANUFACTURING COMPANIES

R. Hojna, L. Stryckova
Thursday 8 November 2018 by Libadmin2018

ABSTRACT

This study focuses on the specific features of managerial accounting used in the Czech Republic, in particular on the typical attitude of manufacturing companies towards product costing and pricing. The objective of absorption costing is to ensure that both the direct and indirect costs of production are included in the production cost. To determine the direct production costs is relatively simple as the amount of them in a product can be measured. On the other hand, the indirect costs are impossible to measure, that’s why allocation, apportionment and absorption of overheads are used. This paper aims to provide up-to-date empirical evidence on the use of various methods of absorption costing analysis by the Czech manufacturing companies. Findings of this article are based on the questionnaire survey and subsequent data analysis. The descriptive statistical methods and procedures were used for the research evaluation. Results of the empirical questioning show that the most frequently used costing method for overhead costs by respondents is the overhead rates calculation method which confirmed theoretical assumptions.

Keywords: absorption costing, direct and indirect costs, manufacturing company, overhead costs, volume-based cost drivers


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