Integrating the ABC method of costs calculation and cash value added
Integrating the ABC method of costs calculation and cash value added

Summary/Abstract: In our paper we intend to explore the possibility of integrating the ABC method of cost calculation with cash based value measure, i.e. the Cash Value Added. Our purpose is to develop an instrument for the management of productive companies that will allow them to administrate the process of value creation at the level of individual products or services. The activity based costing (ABC) method of cost calculation can be extended to the way of allocating the capital costs to individual products and services. In the same time, the value based measures can register the shareholders’ value creation process only at the company level and not for the individual products or services as they lack the information regarding the assignment of capital costs to those products. By integrating the calculus of Cash Value Added in the ABC method we consider that the managers will get an important managerial tool for the efficient allocation of the investment capital for the various products or services, given their real profitability, which can be determined by including capital costs in the overall cost of the products or services.

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