Activity based costing analysis for making managerial decisions


Approaches to expenses allocation



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Approaches to expenses allocation.
In the past decades of the 20
th century changes in the spending pattern can be observed fig overhead costs gradually replace direct labor costs. The reasons for this are automation development, automated machine maintenance, output of wide assortment with short-term production cycle, increase in marketing, sale, market research expenses which have recently dramatically increased as compared to the wage hike [4,7]. Undercurrent production conditions traditional approaches to the overhead reappointment are not efficient because allocation to the objects is conventional. All these factors encouraged the development and application of new approaches to the overhead reappointment. Fig. 2.


Overhead costs replace direct costs.



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