ACTIVITY BASED COSTING AND ITS ITS APPLICABILITY IN THE HOTEL INDUSTRY

Abstract

The hotel industry and tourism in general have become a very lucrative business for an increasing number of entrepreneurs. Consequently, there has been an increase in competition in this area of the service sector. For this reason, there is also a need for continuous improvement of business, which, among other things, is reflected in the reduction of costs with the improvement of the quality of services provided. Activity based costing (ABC) is a management accounting instrument that represents a method of calculating costs by helping to eliminate unnecessary costs while optimizing those costs that are necessary. The ABC costing method was created as an alternative to conventional cost accounting methods, as many of the shortcomings were noted. The ABC method has its application both in the service and in the manufacturing sector. By applying this method in the hotel it is possible to increase the efficiency of the functioning of the entire hotel and enable the establishment of a hotel management system on abc approach. In this paper, we will show the basics of cost-based activities and consider the possibility of its application in the hotels