ABC METHOD IN COST MANAGEMENT

Abstract

The costs arise every time you invest some resources: e.g. material ones in the form of working or fixed assets, financial assets and man’s physical or mental work, to create effects in the form of products or services. The cost phenomenon is a necessity in the process of creating performance. The fundamental question is the extent to which the spent resources ensure required quality of performance? In situations where the costs seriously start approaching actual revenue, the management resorts to use different methods of lowering the costs. One of the frequent methods used is the "cutting" of costs at all levels without the criteria (savings), which can cause serious damage to the organization. Most often the organizations use the combined application of different models of cost management. The goal is to reach such a level of organization in which the cost management (Cost Management) is typical as a special way of managing the organization and conducting business that attributes the greatest importance to cost organization in achievement of general and specific management objectives of the organization. The ABC method is one of the methods of cost management that is often used in different organizations.