INTEGRATION OF THE ACTIVITY BASED COSTING AND THE UNITS OF PRODUCTION METHOD: A CASE STUDY

Abstract

A competitive environment suggests changes in the form of costs management to able the company to remain in the market. Within this perspective, the objective of this article is to describe the integration of the activity based costing (ABC) and the units of production (UP) method in a food plant. The former is used for an appropriation of administrative and commercial expenses as a perfected form of allocating operational expenses; the latter, for the allocation of production variable expenses, marginal cost and fixed costs of production. This research methodology consists of an exploratory study, accomplished through a case study with a quantitative approach. The results of the research have demonstrated that the UP method considers a single measure to calculate production efforts, contemplating exclusively the transformation costs. In turn, by the application of the ABC to allocate operational expenses, the vision of processes and activities expands. It has been concluded that, in spite of different degrees of emphasis, the integration of the two costing methodologies increases quality of information, providing subsidies to the management to improve the classification of activities and the measurement of productivity. Keywords: Integration. The Activity Based Costing. The Units of Production Method.