Criteria for choosing the cost allocation base for industrial enterprises

Abstract

This article is devoted to solving the actual problem of forming a system of criteria for selecting an indirect costs allocation base. Therefore, the purpose of this article was to determine the criteria for selecting an indirect costs allocation base in industrial enterprises. To achieve this goal, the following methods were used: analysis, synthesis, generalization, thought experiment, tabular method, and graphical representation. In the result of using these methods, six criteria for selecting an allocation base were identified. For each of the criteria, a description and justification of its choice were given. Negative consequences were described in the form of cost distortions depending on the selected allocation base. The theoretical significance of this research is to develop cost allocation methods in terms of certainty of process of a choice of the allocation base. The practical significance of the article is the development of clear and unambiguous criteria, the use of which in the process of organizing cost accounting in terms of selecting the allocation base will increase the objectivity and provability of the result obtained. This article will be useful for researchers working in the field of developing the theoretical foundations of accounting and cost management, as well as practitioners in the field of management accounting, as well as managers at various levels.