Material Cost Analysis in Pharmaceutical Companies:Traditional Costing Vs. Activity Based Costing

Authors

  • N. Narsaiah Osmania University, Hyderabad
  • T. Satyanarayana Chary Telangana University

DOI:

https://doi.org/10.33516/maj.v51i3.56-65p

Abstract

Activity Based Costing (ABC) brings a new dimension in pharmaceutical companies' Cost of Goods Sold (COGS) estimation, where, individual raw material and procedural costs are grouped to provide accurate cost estimate per activity. Pharmaceutical companies focus on competition and that affects on basic supply-and-demand dynamics. In this industry, generic drugs probably reduce the cost, which is evident in established pharmaceutical firms; hence, the higher efficiency is essential to scale in market share for every company. This is possible through ABC as it can help in the planning process and effective promotion of the process of budgetary management. This paper attempt to analyze and compare the material cost analysis through Traditional Cost Method (TCM) and ABC and suggest that which method is appropriate and feasible in effective material management.

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Published

2016-03-01

How to Cite

Narsaiah, N., & Satyanarayana Chary, T. (2016). Material Cost Analysis in Pharmaceutical Companies:Traditional Costing Vs. Activity Based Costing. The Management Accountant Journal, 51(3), 56–65. https://doi.org/10.33516/maj.v51i3.56-65p

Issue

Volume 51, Issue 3, March 2016

Section

Cover Story
Crossref
Scopus
Google Scholar
Europe PMC

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