Forest management costs in the Federation of B&H and cost management
DOI:
https://doi.org/10.54652/rsf.2011.v41.i1.140Keywords:
unit cost, cost of production, direct and overhead cost, Activity Based Costing (ABC), production ability, rentAbstract
UDK 630*6/.9(497.6)
The results of this analysis show that the average costs of managing forest resources in Federation of B&H are 81,04 KM per m3, while the average cost of production is also 82,25 KM per m3 of wood assortments. Therefore, the average profit in Federation of B&H is 1,25 KM, and its amount varies from 0,08 KM to 10,43 KM for individual enterprises.
The structure and amount of costs varies by individual enterprises as a result of different condition of economic (different stand conditions, availability of forests and the accessibility of terrain, distance from market, etc.). Besides that, there is no unique methodology for costs calculation of all activities in forest enterprises. Partition of the costs is very high, and arbitrary allocation of these costs creates distorted pictures of these costs. In order to define the objective cost of production, their monitoring, timely identification and adequate distribution to the individual carriers is very important.
Forest enterprises use traditional costing method to manage their costs, which has deficiencies. They are reflected in the fact that they do not provide information about the causes of the costs of all processes, the effects caused by the costs of the task, on efficiency of execution of another task or information about relationship between the costs of one process and the costs of another process within particular activity.
These deficiencies can be eliminated by applying modern methods of costs management, and one of these methods is ABC (Activity Based Costing). This method consists of monitoring costs of activities. With use of ABC method it is possible to get timely information about carriers of costs and causes of costs, their relationship and connection which provide the ability to eliminate unnecessary costs. All this affects the possibility to improve the efficiency and effectiveness of operations, because when the costs occur, there is no possibility to reduce or eliminate them. To apply the ABC method it is necessary to develop an appropriate methodology and provide the necessary prerequisites for its application.
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