Effective cost allocation method in an industrial enterprise environment in mining industry

¹ VSB-Technical University of Ostrava, Faculty of Materials Science and Technology, 17. listopadu 2172/15, 708 00 Ostrava – Poruba, Czech Republic
² Ministry of Industry and Trade Czech Republic, Na Františku 32, 110 15 Praha 1, Czech Republic
³ VSB-Technical University of Ostrava, Faculty of Mining and Geology, 17. listopadu 2172/15, 708 00 Ostrava – Poruba, Czech Republic
⁴ Technical University of Košice, Faculty of Mining, Ecology, Process Control and Geotechnologies, Institute of Earth Resources, Park Komenského 19, 042 00 Košice, Slovakia

^* Corresponding author: kamila.janovska@vsb.cz

Abstract

The ability to optimize costs based on knowledge of business processes during the period of change represented by the fourth industrial revolution is absolutely crucial. This paper is dedicated to the issue of cost management and allocation of overhead costs using the Activity Based Costing (ABC) method under the condition of an industrial enterprise. The aim of the authors was to propose a model that focuses on the allocation of overhead costs and calculation of assignment rates of overhead activities, which mutually cooperate. The proposed model enables objective stipulation of assignment rates of mutually cooperating overhead activities using exact economic-mathematical methods -the Leontief structural model. It was proven that use of the structural model, even in the case of multiple overhead and primary activities, leads to the considerable simplification of calculations when determining the assignment rates of overhead activities.