Activity-based costing method in dairy production enterprises – Implementation, evaluation and accounting

It is discussed by many authorities that the traditional costing methods used in production enterprises today are no longer suitable for today's conditions, cannot meet the needs of the business, cannot adapt to the new production system and technologies, and pushes managers to make reform decisions. In the new decisions to be taken, managers and partners protect the existence of the business and move this existence forward largely depends on the prudence of managers and partners. Business managers and partners who behave in this way need the most appropriate cost method for production and reliable information to be obtained from this method. Based on this, businesses must endure some sacrifices to produce products and/or services. The most important and largest share of these is the cost incurred for the product and/or service. The only purpose of adding to the cost is that businesses, therefore, managers, want to succeed. In other words, it is the desire to make a profit. The cost element, which is at a point of vital importance for business managers and partners, needs to be fully controlled and very well managed. This leads managers to think cost-oriented, but leads them to research the cost calculation methods and strategies necessary for the business. Applying the Activity-Based cost method (ABC) to get the best cost data for the reasons listed above would be the right choice for businesses. While businesses meet people's needs for goods and services, the most important of these needs is food. Milk and dairy products are the most consumed in food. For this purpose, our work becomes important. Because of this, it is important to calculate the cost of each product in a healthy way, since more than one main, sub and by-product is obtained from milk related to the production of dairy products within the scope of the study. As a result of a number of studies within the scope of the study, the processing and management of information about what costs the products produced in dairy production enterprises bear and what activities constitute these costs are investigated. For these reasons, it would be more accurate to use ABC method from modern costing methods instead of using traditional costing (TC) methods in milk production enterprises. The aim of our study is to show the application of ABC method in milk and dairy products producing companies and to make a model proposal and to contribute to Accounting Science and literature by showing the accounting records of the application. The application will be made on a firm. It is hoped that this application will actually help managers to implement ABC method for such firms. The theoretical part is arranged by literature review method, and the application part is given as an example of the application, comparison and accounting of ABC method with traditional costing by considering the production data of a business operating in the production of dairy products. Key Words: Activity-based costing, milk and milk products, accounting