ABC and EVA for decision making

Profit oriented organizations are teleonomic systems that can continue to exist only as long as their performance as systems for the production of value is appreciated by shareholders. In this organization the internal cognition – data gathering processes, strategies, decisions, planning and controls are carried out by the management, which produces rational calculations for decision making, stategies, programmes and controls from which the organization’s action derive. So the management need suitable models for economic calculations, in order to control revenues capacity to remunerate all productive factors, equity included. We start from two remarks. First measuring the Eva permits a valuation of the impact of the resource allocation choices, since it provides a progressive estimate of the value created by management for the shareholders, however, it can become an effective instrument of support for managerial decisions only if it is systematically applied to the operational levels of the organization as well. Second: activity based costing informations fit long term decisions but in the calculation of the full cost of product the ABC methodology does not call for the calculation of the effective or implicit costs and charges connected with capital. So we show how the logic of Economic Value Added and Activity Based Costing must be linked in order to strengthen the cognitive activity of organizations in order to make the production of value maximally efficient, combining the determination of ABC cost with the direct and indirect charges regarding the invested capital and applying EVA logic at the operational levels.