Costing systems: grounds and methodology

Abstract

In order to implement a costing system tailored to companies, clarity is needed in regard to what a costing system is its grounds and methodology. This system must respond to the entrepreneurial specific needs and to be implemented according to the entrepreneurial production model y/o provision of services. It should also provide timely information on decision making; it should allow keeping track of production and costing derived from it. To fulfill these goals, costing systems are fed by different costs databases such as the historical and pre-determined ones and can use diverse methodologies like the total or absorbent cost, direct or variable cost, ABC, Integral and others. What has to be clear for professionals on the field (economic sciences, administrative, accounting) is how to relate, combine and use different databases and methodologies in the implementation of costing systems.