Process costing methods as a tool of financial risks prevention

Abstract

The paper focuses on the issue of the process costing methods as a potential tool to eliminate financial risks. Current surveys point to the fact that majority of Czech companies allocate overhead costs by historical prices or a percentage surcharge to the chosen representative of the direct costs. But there is no premise that direct and indirect costs should develop proportionally. Companies, using these out-date methods, risk the wrong managerial decision which will be identified late. Tools to eliminate this risk are currently processing costing methods. These methods react to harder demands of managers to raise information not only about situation in past, but also to get information in time and quality to interference actual decision-making process. The paper is supplemented by an practical application through a case study.