2nd ICAI 2022

International Conference on Automotive Industry 2022

Mladá Boleslav, Czech Republic

Production overhead costs (EUR / piece) Own costs of production (EUR)

19.31

50.99

14.16

121.31

280.99

165.16

Source: own elaboration (2022) The Table 3 represents a situation that the analysed company correctly allocates its environmental costs directly to the products that were produced during the non ecological production process. All reported results are based on formulas (1) and (2).

Table 3: Correct allocation of environmental costs on production based on Figure 2

Costs

Product A

Product B

Product C

Direct material (EUR / piece) Direct wages (EUR / piece)

55.00 27.00 20.00

180.00

25.00 96.00 30.00

32.00 18.00

Other direct costs

Production overhead costs (EUR / piece) Own costs of production (EUR)

0.90

2.38

130.66

102.90

232.38

281.66

Source: own elaboration (2022) As we can see, the own costs of all products were changed. The comparison of reached results is presented in Table 4. It compares calculated data of own cost of production of all produced products by the accounting entity based on Table 1 and Table 2.

Table 4: Comparison of reported results based on Table 2 and Table 3

Costs

Product A

Product B

Product C

Own cost of production based on Table 1 (EUR / piece) Own cost of production based on Table 2 (EUR / piece)

121.31

280.99

165.16

102.90

232.38

281.66

Total change in %

-15.18

-17.30

+70.54

Source: own elaboration (2022) Related to the processed comparison shown in Table 4, the impact of the selected correct method of allocation of environmental costs has significant consequences on the reported own cost of production of all products. We can see that “Product A” and “Product B” are the products produced without ecologically harmful activities. For this reason, the own cost of production of these products decreased. “Product A” reported a -15.18% decrease of these costs, and “Product B” was cheaper as well because its own cost of production decreased more than 17%. On the other hand, we can see that the “Product C” that was produced with harmful impact on the environment increased its own cost of production by +70.54%.

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