The second updated and enhanced edition of Astbooks titled “Modern Costing and E.L.P.” by Dimitris Konstantopoulos has been created with the addition of topics that arose from observations and questions of fellow accountants during educational seminars on budgeting and costing.

Specifically, Chapter 5 has been added, focusing exclusively on costing and financial analysis of service-providing businesses. Additionally, opinions from the Financial Accounting Board (2022-2023) related to the proper documentation of costs in the accounting books of companies have been included.

Furthermore, to deeply understand the concept of cost, several definitions are necessary, which are the subject of the first chapter of this book. However, the experience of the accountant-cost analyst is also very important, as they must deeply understand the entity’s operations, among other things.

In any case, the main purpose of this book is to assist the accountant-cost analyst or analyst in meeting the following two primary needs of “modern costing”:
   • The correct application of E.L.P. and consequently the tax legislation regarding costing issues and consequently the valuation of inventories.
   • The provision of the appropriate data in order to make a sound business decision.

The application of E.L.P. regarding acquisition cost and the end-of-use measurement of all assets is scientifically valid and accepted for the process of modern costing. However, there are many reasons why calculating the historical cost of produced or sold goods according to E.L.P. is not sufficient or suitable for decision making:

   • Competition today is intense, technology is rapidly evolving, and markets are becoming international.
   • The logic that prevailed in the previous century, that the selling price of a product is based on the historical cost of the previous period plus a satisfactory profit margin, no longer holds today.
   • Competition continually shapes new conditions and prices in the market for products, often preventing the entity from operating in the traditional way.
   • There is a need to find the cost for every activity of the entity and to calculate, based on current market conditions, the level of sales or the usefulness required for each separate activity to remain viable.
   • The cost of each activity is not necessarily recognized as part of production cost according to E.L.P.
   • Part of the cost of goods sold in practice may come from expenses classified as administrative or distribution expenses according to E.L.P.; however, this amount is crucial to be considered as cost for making a business decision.
   • Moreover, the production cost of a good at a specific moment for a specific order often differs from the historical cost of that good.
   • In other cases, to fulfill a customer order that we did not account for in the original design, we need to calculate financial expenses into the cost of this order, which may not be acceptable as we are not implementing this accounting policy.

It is understood that while E.L.P. is modern and advanced, they are not capable, by their mere application, of satisfying the contemporary needs of a modern entity. For these reasons, in Chapter 1, the concepts of financial analysis (fixed and variable costs, marginal cost, differential cost, standard cost, etc.) are developed, which are useful for making a business decision.

In Chapter 2, the elements of cost for all categories of produced goods or services are analyzed. In Chapter 3, the costing process is elaborated upon with detailed examples, placing special emphasis on the accuracy of cost allocation between produced goods and end inventories, according to E.L.P. and tax legislation.

Chapter 4 focuses on decision-making primarily through an extensive practical application of an industrial entity that must make decisions in light of different situations and incidents, thereby facing challenges akin to those most small and medium-sized enterprises encounter in our country. Through the applications in Chapter 4, practical examples are referenced and combined with what has been discussed in the first three chapters of the book at hand.

Finally, in the new Chapter 5, the costing of service provision is analyzed, including basic principles, personnel costs, as well as costing and financial analysis of a law firm and an introduction to the costing of hotel units.