Evaluation ofActivity byActivity-Based Costing

Abstract

In globalized economy there is a severe competition between companies. In this situation a necessity for takingmeasures to reduce costs arises. Traditional costing has problems with distribution of overhead costs. Acompany achieves itsgoals through performance of the activities. Activity-based costing makes the process of the costing formation be obviousthrough activities. It is demonstrated in P.B.B.Turney`smodel.Cost driver rate can be used for evaluation of activity. Cost driverand cost driver rate play a big role in taking decisions about future cost objects. Activity-based costing makes it possible thecorrect evaluation of activity. Exact evaluation of activity gives appropriate information and helps the right decisions.