Cost allocation in wholesale drug trade Asignación de costos en las comercializadoras mayoristas de medicamentos del municipio Alberto Adriani del estado Mérida

Abstract

This paper undertook to describe cost allocation processes used in wholesale drug companies, in the context of cost systems, in the State of Merida – mostly focusing on Alberto Adriani municipality – and its effect in decision making and operations. Descriptive, field research was conducted, based on a non-experimental design of a case study. It is concluded that the calculation of per-branch profitability is arbitrary under the system of total costs used by these companies due to allocation of overhead costs. Such allocation is made based on the level of sales of physical units from headquarters to each branch, which disrupts profits. It is recommended to carry out cost allocation for external purposes in accordance with observable generation bases, or cost drivers which measure consumption of resources or the efforts made by headquarters for a specific branch, under the absorption costing system. Overhead cost allocation is not recommended in order to conduct internal evaluation at branches, in pursuance of the provisions in the direct cost system.