The Modified Activity-Based Costing Method in Universal Postal Service Area: Case Study of the Montenegro Post

Abstract

The 3rd EC Postal Directive proposes a calculation approach to separately determine the net cost of universal service obligation. Also proposes presence of liability to compensate the universal service provider. In this paper, authors have presented the necessity of compliance with Postal Directives through application of the activity-based costing method for costs calculation related to the universal postal operator. The objective of this paper is to research the possibility of modification of the existing, traditional ABC method. Method will improve the quality of cost accounting of the universal postal operators. The aim is to present the implementation of the modified activity-based cost accounting method from the point of view of a universal postal service. Conceptual framework for the modified activity-based costing in the area of universal postal service has been developed and applied in the Montenegro Post. This modification of the traditional activity-based costing, called the modified activity-based costing, for solving specific accounting problems in a universal postal service area, is the main contribution of the paper. As long as the modified ABC method is not created and implemented, the Montenegro Post has been unable to adequately respond to the established legal requirements. The presented method can be a guide for other postal companies with matters concerning the calculation of costs and revenues.

Integration of Activity-Based Costing Modifications and LEAN Accounting into Full Cost Calculation

“…TDABC simulates the actual process of corporate operations and does not require as complex data calculation, accumulation and processing as the ABC, its predecessor. The authors have provided rationale behind practical applicability of the TDABC by the example of a large international product distribution company (Kaplan & Anderson, 2004) Application of both the ABC and TDABC has been analysed using the examples of service sector: construction project management (Kim & Ballard, 2001), electronic warehouse (Pawlyszyn, 2017), health care (French et al, 2013;Campanale et al, 2014;Kaplan, 2014;Esmalifalak et al, 2014;Hoozee & Hansen, 2017;Balakrishnan et al, 2018), library services (Siguenza-Guzman et al, 2014), education (Berry, 2014), postal service (Kujacic et al, 2015). This is because the indirect costs comprise greater share of the service cost.…”

Problems with Activity-Based Costing Implementation in Polish and Lithuanian Companies

“…According to Cooper & Kaplan (1988), ABC can be used to support a corporate strategy, including strategic decisions such as pricing, product mix, new product designs, and the management of different resources (Innes & Mitchel, 1995;Bescos et al, 2002;Allain & Laurin, 2018;Altawati et al, 2018;Wegmann, 2019). The literature also shows situations where ABC is used in making operational decisions, such as: (a) reducing cost in operational departments (Anderson & Young, 1999;Kujacic et al 2015;Sorros et al, 2017), (b) improving quality (Innes & Mitchel, 1995;Bescos et al, 2002;Feng & Ho, 2016) and (c) modeling costs and value inventories (Innes & Mitchel, 1995;Bescos et al, 2002;Kujacic et al 2015;Almeida, Cunha, 2017). Since it originated in the late 1980s, the concept of Activity-Based Costing has been quite popular among organizations all over the world; however, ABC has also its well documented disadvantages.…”

Efficiency and Productivity Analysis of Universal Service Obligation: A Case of 29 Designated Operators in the European Countries

“…However, although the new information and communication technologies bring to a higher efficiency of postal process and generate some additional services such as e-commerce, the decline in letter post is generally noted in the recent years. By adding the impact of universal service obligations to the previously described challenging conditions, having in mind that these obligations are very often driven by the political factors and as a rule with a negative financial balance which can be measured (see Kujacic et al, 2015). Frontier Economics (2013) prepared a study for the European Commission on the principles used by the national regulatory agencies to calculate the net cost of the USO.…”