The purpose of this thesis is to examine a current stage of product costing in a business unit of global technology group. The study also focuses on how the current stage of product cost control can be enhanced with a model motor concept. The study is executed as a qualitative case-study based on data of one organization. References for the theory part are mainly books and articles from academic journals. The practical part of this study is based on interviews, organization’s information systems and knowledge gained from the organization.

The study reveals that in the current stage business unit does not monitor product costs at single product level. Instead they monitor product costs in larger units that are based on average costs of products. The current product costing method can be considered as a traditional costing method that allocates indirect costs by using burden overhead rates. The study also reveals that there are signs that current cost allocations distort calculated costs of the products.

The main purpose of this study was to create a cost model that enhances cost control of product costing. Aim of the model is to collect the costs of the carefully selected products in monthly base. With the cost model business unit can monitor cost structure and cost development of products. The cost model enhances cost consciousness in product stage costing and give possibility to monitor cost development. The cost model uses data from costing system. Because of source data from the current costing system there are also sings of cost distortion.