Abstract
Before conducting the research, two main hypotheses were proposed:
H1: The majority of Croatian production companies use traditional accounting methods for cost allocation.
H2: Direct production costs make up the largest portion within the production cost structure for the majority of Croatian production companies. Because of this production cost structure, modern cost allocation accounting methods would not contribute to more reliable company profitability evaluation and business decision-making.
The research is based on a specific sample including every important Croatian public production company. The process of cost allocation process is not easy. It is a difficult and complicated procedure that requires the application of appropriate accounting methods. The process of allocating costs to cost objects is realized through the application of certain accounting methods. These accounting methods often cannot provide fair and objective cost allocation because they have arbitrary bases that are not always appropriate.