Application of Activity-Based Costing in the Escuela de Organización Integral de Eventos at the FSCH-ESPOL

Abstract

Efficient cost management is crucial in event companies, where incorrect cost allocation can distort profitability and affect decision-making. This study implemented Activity-Based Costing (ABC) at Escuela de Organización Integral de Eventos Company of FCSH-ESPOL, with the aim of improving the accuracy in cost distribution and providing more reliable financial information. The costing was carried out with data collected over a period of one year, while the validation and comparative analysis were conducted at six events of different magnitudes. The tool used for modeling and analysis was Microsoft Excel. This tool was used to evaluate the accuracy of the ABC method compared to the traditional costing system. The results showed that the previous method omitted indirect costs and overestimated profitability. In a specific event, the previous system rated it as profitable, while ABC revealed losses. Additionally, it allowed for a more equitable distribution of costs according to the actual consumption of resources. In conclusion, ABC costing optimized financial management and improved strategic decision-making, highlighting its importance for companies in the sector. Application of Activity-Based Costing in the Escuela de Organización Integral de Eventos at the FSCH-ESPOL