Implementation of the Rules on Criteria for Allocating Revenues, Expenses, Assets and Liabilities to Sources of Funds by Individual Activities in the Existing …

Every company is established with the aim of generating profit. In today's global world, companies strive to remain competitive, increase production, reduce costs and thereby generate greater profit. Known cost types include natural cost categories, direct and indirect costs, variable and fixed costs, short-term and long-term costs, additional and marginal costs, and original and derived costs. The emphasis is primarily on the preparation of the income statement by activities based on the Rules on Criteria for Allocating Revenues, Expenses, Assets and Liabilities to Sources of Funds by Individual Activities, which was updated in December 2019 and came into force in January 2020. This involves comparing and identifying deviations in the net operating result of individual activities in relation to the previously applicable rules.

Problem

Every company is established with the aim of generating profit. In today's global world, companies strive to remain competitive, increase production, reduce costs and thereby generate greater profit. The basic and most important factor for a company is cost management.

Company management must have a good understanding of the cost management area, as only in this way can they control costs and make good business decisions. Information is the basis for management to monitor and control the company. Information must be accurate, precise, appropriate and timely.

Knowledge of different cost classifications enables easier understanding and responsiveness to different business conditions.

Solution and Method

Known cost types include natural cost categories, direct and indirect costs, variable and fixed costs, short-term and long-term costs, additional and marginal costs, and original and derived costs. Costs in carrying out business tasks arise at different cost centres. The causes of costs are cost carriers – the products and services created.

Through careful and precise monitoring by cost types, cost centres and cost carriers, a company can control, manage and also predict or plan costs. The diploma thesis broadly comprises two parts. The first part presents the basic concepts of cost allocation, types of costs, the importance of determining costs by cost centres and cost carriers, and the significance of criteria or keys for reallocating costs from indirect cost centres to final cost centres or profit centres.

The second part of the thesis is practical. It presents the cost centres, profit centres and departmental sections of Company X.

Results

The emphasis is primarily on the preparation of the income statement by activities based on the Rules on Criteria for Allocating Revenues, Expenses, Assets and Liabilities to Sources of Funds by Individual Activities, which was updated in December 2019 and came into force in January 2020. This involves comparing and identifying deviations in the net operating result of individual activities in relation to the previously applicable rules. The adoption of the new rules on the reallocation of indirect costs and the determination of allocation criteria/keys should not significantly affect the operating results of individual activities.

The rules should be comparable to each other.