THE USE OF ACTIVITY-BASED MENAGEMENT: A STUDY OF MANUFACTURING COMPANIES IN THE REPUBLIC OF NORTH MACEDONIA

Abstract

Cost management, i.e planning, calculation and cost control is the most important area of management accounting where cost calculation methods play the crucial role. Traditional methods date back to the time when direct labor costs were significantly involved in the cost structure but with the rise of support costs or indirect costs the cost accounting approaches have changed. This paper presents the cost management models with a special focus on the method of calculating activity-based costs (ABC). The research part of the paper is carried out for chosen companies in the Republic of North Macedonian. By conducting a field survey in 24 companies from the manufacturing sector, the main research aim of this paper is to investigates the adoption of activity-based costing as a cost management technique among the employees. More specifically, the survey examines the adoption and the implementation of specific cost management techniques, or more precisely, the use of the ABC method and the benefits of its implementation. Based on the information obtained from 216 responses, the findings indicate that the major part of the companies in the manufacturing sector in the Republic of North Macedonia practice the system of activities. The surveyed employees are familiar with the activity-based management and are highly aware of the benefits and the advantages of the implementation of the ABC system.