Proposal for the Cost Model Based on Causal Activities to Rationalize the Decision-Making Pricing. Applied Study in the General Company for Leather Industries – Baghdad

Abstract

Purpose: The aim of this study is to shed light on the concepts of activity-based costs by studying and analyzing the relationship between activity-based cost reduction and the consolidation of pricing decisions, with proposing an activity-based cost model in the analysis of additional costs and the products that cause this to happen. Theoretical framework: The proposed model and recommendations contribute to making this company apply modern cost systems that help control cost elements as well as provide annual activities information on a database, in addition to its contribution to making pricing decisions related to products. Methodology: The research methodology is based on cost analysis and pricing decisions, as it chose the General Company for Leather Industries in Baghdad, one of the companies of the Ministry of Industry and Minerals, and the data was analyzed by analyzing the values ​​through cost pools. Study and sample population: Account managers and employees in the General Company for Leather Industries. Findings: The conceptual framework is useful for the company's management, account managers and control to make the company more effective in allocating costs based on activities and knowing the reasons for the high costs due to the use of traditional methods of costing. Research, Practical & Social implications: The study can benefit the company in controlling the high additional costs and controlling the pricing decisions of industrial products, especially the leather industry. Originality/value: The value of the study is tested the relationship between additional costs and pricing decisions using the activity-based cost method, which was applied in the General Company for Leather Industries.