THE INFLUENCE OF ABC COST CALCULATION METHOD ON ECONOMIC ENTITIES PERFORMANCE

There is a direct relationship between ABC method and financial performance of entities, but only in the context of certain drivers, as well as the establishments’ size, the offered products diversity, indirect cost structure or organizational culture. A competitive position is also generated by products mix, making it unlikely that a single product can sustain a long-term high profitability due to its life cycle. The costs value calculated using ABC method which exceeds the amount of the traditionally costs calculation is explained by hidden costs previously unidentified. For the products whose costs calculated by ABC are lower than those traditionally calculated, the difference is justifying by a hidden profit. The explanation of both favorable and unfavorable differences is assigned to different indirect cost configuration used by these two methods.