Different accounting practices, based on the same accounting concepts and principles, have been developed to meet the multiple and changing needs of users of accounting reports. Direct and absorption costing are two accounting practices, however, there is still controversy over which of these methods is better for decision reporting and reporting to users of accounting information. This paper aims to dwell on the historical nature of the controversy and develop the arguments for a cost accounting method based on economic logic and market reality, presenting the genesis of variable cost accounting, as well as comparing the effects of the absorption cost price, on the one hand, and the effects of direct costing on the other hand, to net profit.on the net profit, on the other hand. The work will be limited to non-technical aspects of the application of the cost accounting system in manufacturing companies. The primary intention is that this paper contributes to the accounting profession, however, the paper is not intended only for accountants, but also for company managers.

Read online

Download this PDF file

Barden, H. G. (1973). Accounting basis of inventories - Accounting research study no. 13. Guides, Handbooks and Manuals.

https://egrove.olemiss.edu/aicpa_guides/145

Bunea-Bontas, C. A. (2013). The Cost of Production Under Direct Costing and Absorption Costing – A Comparative Approach. Annals - Economy Series. Constantin Brancusi University, Faculty of Economics, vol. 2. 123-129.

Donnelly, V. T. (1961). Direct costing. Haskins & Sells Selected Papers. 378-392. https://egrove.olemiss.edu/dl_hs/

Gersil, A., Kayal, C. (2016). A Comparative Analysis of Normal Costing Method with Full Costing and Variable Costing in Internal Reporting. International Journal of Management 7(3). 79–92.

http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=7&IType=3

Gyan, C., Paperman, B. J. (1976). Direct costing vs. absorption costing: A historical review. Accounting Historians Journal 3(1). 1-9.

https://core.ac.uk/download/pdf/288065843.pdf

Harris, J. N. (1936). What Did We Earn Last Month? N.A.C.A. Bulletin (January). 501-527.

Hendriksen, E. S. (1970). Accounting Theory. Richard D. Irwin, Inc. Homewood, Illinois.

Horngren, C. T., Sorter, G. H. (1961). Direct Costing for External Reporting. The Accounting Review 36(1). 84-93.

Ijiri, Y., Jaedicke, R. K., Livingstone, J. L. (1965). The Effect of Inventory Costing Methods on Full and Direct Costing. Journal of Accounting Research 3(1). 63-74.

Krishnan, S., Lin, P. (2012). Invetory Valuation Under IFRS and GAAP. Strategic Finance 93(9). 51-58.

Lang, T., McFarland, W. B., Schiff, M. (1953). Cost Accounting. Ronald Press Co.

Mauriell, J. A. (1965). Convertibility of Direct and Conventional Costing. NAA Research Series No. 23: "Direct Costing" (Selected Papers). Ed. Marple, R. P. The Ronald Press Company, New York.

Međunarodni računovodstveni standard 2. SRRRS.

https://www.srrrs.org/dokumenti/Medjunarodni_racunovodstveni_standardi/IAS/2019_IAS_2_prevod_IA_ZS.pdf

Noble, P. L. (1952). Differential Cost Accounting. Doctoral dissertation. The Ohio State University.

https://www.proquest.com/openview/daa97e17ef8fb02d76275b549bc907b4/1?pq-origsite=gscholar&cbl=18750&diss=y

Schiff, J., Buzinkai, D. (2021). Is It Time to “Retire” Full Costing? Management Accounting Ouartely 22(2). 1-11. https://www.imanet.org/insights-and-trends/management-accounting-quarterly/maq-index/2021/winter-2021?ssopc=1

Shillinglaw, G. (1961). Cost Accounting: Analysis and Control. Richard D. Irwin. Inc. Homewood, Illinois.

Stevanović, N., Petrović, T. (2016). Upravljačko računovodstvo (Drugo izmijenjeno i dopunjeno izdanje). Ekonomski fakultet Brčko.

Waller, B. G. (1971). Direct costing versus absorption costing. Master's thesis. The School of Government and Business Administration of The George Washington University. https://core.ac.uk/download/pdf/36708914.pdf