Importance Production costing is the principle and most complicated component of costing and developing of a production and economic mechanism in any entity. When the management accounting and control system is successfully applied, activities of a telecommunications company and some types of services will be profitable; the company will be able to make provisions for decline in the cost of services, determine prices, assess the economic efficiency of innovative technologies implemented. Conventional accounting and control methods do not always allow implementing contemporary management requirements completely. The innovative development and specificity of telecommunications companies require implementing process-oriented management accounting methods in order to enhance the entire system of managing a company and its units. Objectives The objective of the research is to prepare recommendations on the ways to build the main components of the activity-based costing (ABC) system and increase the efficiency of telecommunications companies. Methods Using common scientific methods and accounting procedures, we find out advantages of using the ABC system, determine business processes, cost drivers and procedures for implementing the system into practical operations of telecommunications companies. Results We propose our recommendations on the ways to implement the ABC management accounting system in operations of telecommunications companies. We articulate suggestions on calculating the cost of business processes (main, ancillary, administrative), recommend resource drivers to correctly allocate indirect costs, and reveal advantages of the ABC system for telecommunications companies. Conclusions and Relevance If the above accounting concept is adapted to the specificity of a telecommunications company, it will allow improving the managerial decision-making process and the efficiency of the telecommunications company. We conclude that, if applied, the ABC system will help telecommunications companies fulfil their competitive advantages on the basis of the ABC information.
Keywords: management accounting, cost accounting, telecommunications, business process, ABC system
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