The problem of full cost definition is significant not only for the enterprise services preparing financial statements for external users (various public authorities, minority shareholders, etc.), but also for those involved in generating internal management accounts. The reason is that owners and managers, making strategic decisions, have to evaluate total production cost and cost of sales of specific types of products taking into account available resources, as only covering all costs in the long term is the key to stable operation of a business entity. The aim of the study is to formalize procedures for calculating gross expenditure of product manufactured within one enterprise. The objective of the study is to build a tabular model and to develop its implementation phases based on iterative calculations within Microsoft Office Excel spreadsheets, as well as the methods of its application in the economic practice of specific enterprises. The paper analyzes the possibility of allocating indirect costs using iterative calculations, and formalizes a tabular model to calculate gross expenditure of production. The authors analyze the problem of allocating indirect costs at an enterprise; offer a method of indirect cost allocation based on backward technology linkages. The proposed methods allow improving the mechanism for indirect cost allocation in the course of calculating the total cost of production at the plant. Allocation of indirect costs enables to make a more adequate assessment of economic activities of an enterprise, and ensures high-quality management reports prepared under the proposed methodology. This, in turn, increases the effectiveness of strategic decision-making by owners and managers of a company thus ensuring the efficiency of operation of individual industries and the national economy as a whole.
Keywords: cost allocation, iterative calculation, full cost, management decisions, traditional approach, functional approach, cost center, indirect costs, International Financial Reporting Standards
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