Traditional Cost Accounting Research Articles

Integration between Value Engineering Technology and Activity-based Costing and their Impact on Reducing Costs: Applied Research in Baghdad Soft Drinks Company/Private Shareholding

The research mainly aims to integrate activity-based costing and value engineering and consider their role in reducing costs for industrial facilities in the face of the modern business environment characterized by many developments and rapid changes. The research problem is that traditional cost accounting methods are insufficient to provide organizational units with useful information in many administrative decisions, especially those related to product quality, to calculate costs and meet requirements correctly and can be replaced by modern cost management methods. Moreover, to find compatibility between them in a competitive environment in the public and private sectors, The study is based on the following hypotheses: There is a significant relationship between the integration of value engineering technology and activity-based costing and cost reduction, and the integration of value engineering technology and activity-based costing has a significant effect on cost reduction.

Analisis Penerapan Metode Activity Based Costing Method Untuk Meningkatkan Akurasi Dalam Menentukan Perhitungan Harga Pokok Produksi

The aim of this research is to determine the application of the Activity Based Costing method to increase the accuracy of production cost calculations. The research method used in this research is a descriptive research method using a case study approach which took the research location in Puspita, Jakarta City. The results of this research show that the calculation of production costs using the traditional analytical accounting method is IDR 15,978.15 while the Activity Based method of determining the cost of production Costing is IDR 15,766.36 so there is a price difference in the D lunch box production method at Pupita Catering Town Jakarta, which is more appropriately applied to operating costs based on the difference of IDR. 211.79 is lower compared to traditional cost accounting methods because factory overhead costs are allocated to several cost drivers so that operating costs can be allocated to products correctly and precisely according to the consumption of each activity.

ІНСТРУМЕНТИ ПРИЙНЯТТЯ СТРАТЕГІЧНИХ РІШЕНЬ В УПРАВЛІННІ ВИТРАТАМИ ПІДПРИЄМСТВА

Traditional cost accounting is aimed at identifying costs that are incurred on an ongoing basis in connection with operating activities. The concept that supports the decision-making process in the long term is strategic cost management. The purpose of the article is to identify the tools for strategic decision-making in cost management focused on the corporate strategy of an enterprise.
 It is determined that strategic cost management is a process of making decisions on specific cost drivers in the context of the company's development strategy and value chain. An enterprise should evaluate its value chain in comparison with similar chains of competitors. The article presents a methodology for such an assessment.
 It is proved that strategic management is based on the following assumptions: connection with the value chain, strategic positioning of the enterprise, analysis of cost drivers, the client is the starting point for decision-making and activities, which results in the adoption of the market price as the basis for cost planning and product development, implementation of cost management in the early stages of the product life cycle, since the cost is largely determined by the product features determined at the stage of its design and development. A key element of targeted analysis is cost estimation in terms of the impact of specific factors (drivers). Strategic cost drivers are determined based on the implementation of the development strategy and its connection with the value chain. There are two main types of them: structural cost drivers and implementation cost drivers.
 It is substantiated that strategic cost management involves the use of product life cycle costing. Depending on the phases of the product life cycle, various management methods based on basic models are used: "ABC-Costing, Target-Costing. Strategic positioning of the company in terms of costs incurred should be carried out by means of cost benchmarking, which is aimed at comparing the costs incurred by the company and its competitors. The subject of comparisons is the cost of processes that allow achieving a competitive advantage.

A review of U.S. management accounting evolution: Investigating shifts in tools and methodologies in light of national business dynamics

This study provides a comprehensive analysis of the evolution of management accounting in the United States, focusing on the shifts in tools, methodologies, and the influence of national business dynamics. The primary objective was to understand how management accounting practices have adapted to technological advancements, economic changes, and regulatory developments. Utilizing a systematic literature review process, the study involved identifying relevant literature through databases like Scopus, Web of Science, and Google Scholar, employing keywords related to management accounting evolution. The selection of sources was based on predefined inclusion and exclusion criteria, emphasizing relevance, quality, and methodological rigor. Content and thematic analysis was used to interpret findings from the qualitative data. Key findings revealed a significant evolution from traditional cost accounting methods to strategic, data-driven approaches, influenced by technological advancements and changing business environments. The study identified a shift towards integrated, predictive, and data-driven management accounting practices, with a growing focus on sustainability and digitalization. The impact of technological, economic, and regulatory factors was found to be profound, necessitating continuous adaptation in management accounting practices. The study concludes that management accounting in the U.S. is highly dynamic, responding effectively to technological and economic changes. Recommendations for future research and practice include embracing technological advancements, adapting to economic and regulatory changes, focusing on sustainability, enhancing education and training, and encouraging collaborative research. This study underscores the necessity for ongoing adaptation and innovation in management accounting to maintain relevance in a rapidly evolving business landscape.

The STUDI PUSTAKA PENERAPAN ACTIVITY BASED COSTING PENENTUAN TARIF LAYANAN DI RUMAH SAKIT

This study aims to provide literacy regarding the implementation of Activity Based Costing in determining cost product in hospitals in Indonesia. Several studies have found that many hospitals calculate the rates for their services using unit costs based on the calculation of the cost of production which does not reflect actual activity, resulting in errors in decision making on service rates. According to Supriono (1999) in Andriyansah et all (2013), Hospitals in determining the cost of products, sometimes still use traditional cost accounting, where this system is not suitable for advanced manufacturing environments, and with high product diversification. This research is a literature study on the implementation of Activity Based Costing in Indonesian hospitals. The data collection method is a literature study of 14 (fourteen) studies on the ABC system used by hospitals for the period 2012 to 2023. The results of the study show that Activity Based Costing is an effective tool in service companies to be able to trace costs of services provided. generated and assists in the implementation of total quality in service companies by encouraging management to analyze activities and determine their value to customers. However, several studies have shown that not all service companies, especially hospitals, can implement this system. Sarokolaei (2012) found that the banking sector in Iran that there is no significant difference between fees calculated by setting Activity Based Costing and by traditional methods for current bank deposits and deposits, so that the application of Activity based costing in service companies depends on how the company understands Activity Based Costing and determining variable costs.

ESTABLISHMENT OF ACTIVITY BASED MANAGEMENT ACCOUNTING FOR STRATEGIC PRICING IN A TRADING COMPANY IN THE FURNITURE INDUSTRY

Today, businesses need the right tools to use scarce resources more efficiently. As well as allocating resources in an efficient way, companies must develop and support ideal management approaches with these tools. The application of activity-based management accounting for strategic pricing in companies includes a shift from traditional cost accounting methods to a more comprehensive approach relating costs to activities and ultimately to pricing decisions. Activity-based management accounting provides a better understanding of cost behavior by identifying and analyzing the activities which are involved in producing and delivering products or services. In this regard, the purpose of this study is to develop an activity-based management model for strategic pricing in a trading company in the furniture industry. The developed model is significant since it details the stages of realization, considers strategic price variables and fixed costs of resource production one by one. To establish activity-based management accounting, all activities involved in the companys operations must be defined, classified, and cost assigned to each activity, which will enable the company to identify the cost factors for each activity and how these affect the overall cost of production. Companies can also analyze the profitability of their products or services using activity-based management accounting to determine which activities contribute to profit and which do not. KEY WORDS: Strategic Pricing, Activity-based costing, Activity-based management

Assessing Digital Transformation of Cost Accounting Tools in Healthcare

The expansion of digital technologies has significantly changed most economic activities and professions. Digital technologies penetrated managerial accounting and have a vast potential to transform this profession. Implementing emerging digital technologies, such as artificial intelligence, blockchain, the Internet of Things, big data, and cloud computing, can trigger a crucial leap forward, leading to a paradigm-shifting in healthcare organizations' accounting management. The paper's main objective is to investigate the perception of Romanian accountants on implementing digital technologies in healthcare organizations' accounting management. The paper implies a study based on a questionnaire among Romanian accountants who use various digital technologies implemented in traditional and innovative cost accounting tools. Based on structural equation modeling, the results emphasize the prevalence of innovative tools over traditional cost accounting tools improved through digital transformation, digital technologies assuming the most complex and time-consuming tasks. Moreover, the influence of cost accounting tools improved through digital transformation on healthcare organizations' performance is much more robust in the case of innovative tools than in the case of traditional cost accounting tools. The proposed model provides managers in healthcare organizations with information on the most effective methods in the context of digital transformation.

The problem and neural network model of optimization of the farm sown areas structure

Optimization of agriculture is becoming a priority for the modern economy. Today it is important to take measures to form and develop in Ukraine both large agricultural enterprises and small farms. Managers of agricultural enterprises are constantly looking for rational and effective means to reduce costs, which involves the process of optimizing agriculture. However, previously established traditional cost accounting tools are becoming inefficient, time-consuming and inaccessible to business leaders, as qualitatively different means of fixing costs are needed to optimize agriculture. The purpose of this work is to increase the profitability of crop production by developing neural network technology to optimize the structure of sown areas of the farm. The objectives of the work are: – to determine the factors influencing the profitability of crop production and the structure of the training set of crop data for previous years; – to determine the structural elements and build a model to solve the problem of increasing the profitability of crop production, taking into account crop rotations; – experimental verification of the developed technology using a set of training and control data samples. To achieve the goals of the work were used: methods of mathematical modeling, methods of decision theory, evolutionary algorithms, neural networks. To perform these tasks, the concepts of crop rotation were studied and auxiliary data tables were developed, containing information on the level of inexpediency of crops of the same crop, the level of inexpediency of crops of one crop after another. Based on these data, the coefficient of estimated crop yield was calculated. A set of data was formed containing information on 10 fields, each of which was randomly "sown" with agricultural crops, and based on the value of this crop and the coefficient of probable yield of the crop, the probable profit was calculated. A genetic algorithm has been developed in which the value of fitness function was determined using a neural network trained in the generated data set. On the generated data set, the operation of the algorithm was tested, which showed the effectiveness of the proposed technology.

Contemporary Cost Management Techniques:the Appropriate Alternative to the Traditional Cost Accounting Systems Applied in the Iraqi Industrial Units – An Applied Case

Contemporary Cost Management Techniques:the Appropriate Alternative to the Traditional Cost Accounting Systems Applied in the Iraqi Industrial Units – An Applied Case

The costs and cost accounting model (simplified) in State Forests National Forest Holding

Purpose: The article aims to: (1) revise the costs and cost accounting model in State Forests National Forest Holding (PGL LP), (2) investigate the possibility of applying resource-process consumption accounting in the activities of the State Forests. Methodology/research approach: A critical analysis of the literature, desk research, analysis of phenomena, synthesis of results, and a case study. Results: A systematic, traditional cost accounting model is used at State Forests, which is mainly used for reporting purposes. It is possible to use the resource-process model of cost accounting from the perspective of its usefulness in disclosing information about the im-plementation of social and environmental goals in the activities of State Forests. Research limitations/implications: The proposed cost accounting model was constructed with State Forests in mind as a specific unit operating in the field of social responsibility. Originality/value: The article proposes solutions for modeling an accounting system, including resource-process cost accounting.

OPTIMIZATION OF PRODUCTION COSTS OF AGRICULTURAL COOPERATIVES AS A FACTOR IN THE FORMATION OF A STABLE FOOD SUPPLY SYSTEM

the article deals with the economic functions that can be performed within the framework of the development of cooperative forms of management that affect certain indicators of socio-economic potential of rural areas, optimization of production costs of agricultural cooperatives. The paper describes the further development of agricultural cooperation, taking into account the optimization of production costs, the impact on the identified factors that will contribute to the agricultural economic sustainable development of rural areas sustainable food security system. The development of agricultural enterprises is a priority in the market economy. The article describes the development support of agriculture, through the modernization of existing farms the opening of new large holdings small farms. Agricultural entities are constantly searching for the most optimal effective forms of cost management. If earlier traditional cost accounting systems were justified, now, in the modern competitive environment with Kazakhstan's accession to the WTO, it is necessary to review existing approaches. The method of cost accounting used in the main branches of agriculture is based on the generalization of costs for technological processes associated with the stages of work provided for by production technology in crop livestock production, can be characterized a process-by-process approach. The use of such modern cost accounting systems as and target-costing is the most promising way to solve the problem of modifying the current methodology for cost accounting calculating the cost of production at agricultural enterprises. The use of the cost accounting system Kaizen-costing (translated from the Japanese improvement in small steps) is inextricably linked with the introduction of the Japanese philosophy practice of Kaizen the related concept of lean manufacturing (lean technology)-a management concept based on the desire to eliminate all types of losses.

A case study on the application of activity based costing on the magnetic inductor

Speedy improvements in cost accounting since the 1960s have been noticed, particularly after the 1980s, in the percentage of total cost, overhead costs have increased. The problem of overhead allocation was faced by several companies and a disparity between the available methods of overhead allocation was developed. Because of skewed facts about the viability of their orders, goods and clients, traditional cost accounting (TCA) not anymore represents the actual economic reality. Consequently, in the moment of increasingly growing material liquidity and ambiguity, a new costing approach is needed to address the weakness of TCA. The goal of the study is to establish a new costing structure using activity based costing (ABC) method to the magnetic inductor for better precision. The case study is located at electronic industry in Pahang, Malaysia. ABC reports on the costs of manufacturing, selling or funding the goods used in the operations. The job was done correctly by the operator to accomplish the entire mission. The maximum time used by operators is at epoxy application activity which is 44.04% and the smallest is 0.64% at oven curing and boundary inspection activity. The highest amount of cost of capacity is epoxy application activity with MYR 1,665,600.00 and the quantity of material utilized is selected as the cost driver. Since the product required volume is up to 10%, production costs are expected to increase by MYR 4,160,614.85 while the unit product cost is forecast at MYR 0.79. Therefore, ABC is an cost management insightful process and cost control efficient approach.

Study on Implementation of Activity-Based Costing (ABC) System on Determination of Indirect Costs in Ship Production

Currently, business development, especially in the maritime sector, has quite rapid progress in Indonesia. Recently, the shipbuilding industry's development is an effort to improve competitiveness with the global market. With the increasing development of the shipbuilding industry in Indonesia, cost accounting as a cost information system is challenged to develop the shipbuilding industry, requiring high product quality. This matter requires the company to decide on proper budget planning not to experience losses. Activity-Based Costing (ABC) System is a system to determine costs using activities to classify costs to produce indirect costs that are more systematic and relevant. Activity-based costing systems identify resources in each department's activities to provide information about a product's cost. It collects indirect costs and allocates them to various products in proportion to the product volume. Therefore, activity-based costing can estimate the product costs and individual activity costs used in the production well. The first step is classifying activities, associating various costs with various activities, determining homogeneous cost groups, and determining group rates. The second step of this stage is the determination of overhead prices selected from each cost group. This research compares indirect costs to the construction of 2x1800 HP tugboat ships according to traditional cost accounting methods with the Activity-Based Costing System method. The first method's result is 3,432,920,043 IDR and the second method is 2,231,760,472 IDR.

Measuring the Success of Activity Based Costing within the Enterprise Resource Planning Environment in Greek Companies

Activity-based costing (ABC) is a strategic tool that can enhance all processes and functions of an organization once it is implemented successfully. This study aims to examine the ABC implementation success in Greek companies in major sectors of the economy. A web-based questionnaire was conducted between February 2020 to January 2021 and collected data from 102 companies found in major sectors of the Greek economy. ABC implementation success was assessed across five dimensions, namely, general attitude toward the implementation process, technical and technological characteristics, impact on organizational process, perceived usefulness in improving job performance, and perceive ease of use. Further, this study compared companies that fully implemented ABC to those that still practice traditional cost accounting (TCA), assessing factors that influence ABC success within Enterprise Resource Planning (ERP). Findings from this study show that a successful integration among ERP and ABC can minimize the operation costs and enhance the competitiveness of the enterprise. In particular, the findings indicated that the degree of ABC within ERP implementation success positively motivates the extent of its use, enhances user performance, increases productivity, and increases user satisfaction with the system. This study contributes to the existing literature since there has been limited research on measuring the success of ABC within ERP implementation in Greek companies. Further, it provides theoretical and practical insights about factors that might influence the success implementation of ABC within ERP that can be applied to other countries. Overall, entities with ABC implementation have improved outcomes relative to those with TCA.

Sunflower Price Differentials Attributed to the Disparity of Traditional Cost Accounting and Conventional Methods in Tanzania

Sunflower is among the key cash crops in Tanzania, which contribute significantly to the country’s economy. As it is the case for other crop subsectors, sunflower is also grown in abundance by smallholder farmers. Nevertheless, they had been living in poverty throughout their careers in agriculture which on the other hand benefited the counterparties in the trading deals. The unfair price offered to sunflower farmers was discovered in this study to be a misfortune in their investments. The conventional average farm-gate price of TZS. 622.449/Kg was found to be out of the price ranges that were backed by traditional cost accounting system, leaving farmers making losses of minimum TZS. 99.889/Kg. This study was conducted in Singida Region, Tanzania where a sample of 206 household farmers was used to obtain primary data on activity costs while the secondary data concerning the conventional price were obtained from the Districts’ sales reports and farmers’ records. Inferential statistics with one-sample test model was used alongside the IBM SPSS 26.0 statistical package in the quantitative data analysis. It was recommended, further studies to be conducted to explore more about the production cost that is backed by the activity-based costing (ABC) system, as it is more effective in assigning overheads to cost object than the traditional costing.

Implementation Study of Activity Based Costing System to Define Indirect Costs on Ship Repair Industries

Good quality, the right turnaround time, and affordable service costs are three important points that must be paid attention to in repair shops offering their services. In determining the selling price of repair services, companies need accurate information about the cost of goods manufactured, which consists of direct costs and indirect costs. In general, the imposition of indirect costs to products uses a traditional cost accounting system so that costs distortions often occur. With the development of existing knowledge, companies must be able to increase their competitiveness and find alternative methods than traditional cost accounting systems. The activity based costing method developed and became a cost accounting method by assigning costs to activities based on the consumption / use of resources. First, activity identification is carried out based on existing business processes, both direct and supporting repair activities. Second, from the results of the identification of existing activities, identification of needs that trigger an activity that can be called an activity driver is carried out. After identifying the activity driver, the type of activity in the ship repair process is obtained which affects the high indirect cost expenditures. By using the activity based costing method, the indirect cost value on ship 1 is IDR 78,994,805, - and on ship 2 of IDR 57,890,169, -. These values are true values and can be traced to each activity through the use of resources. From these results it can be seen that the value of indirect costs when calculated by the activity based costing method produces a smaller value when compared to the existing method. On ship 1, using the activity based costing method, indirect costs decreased by 44% from the calculation of the existing conditions and on ship 2 decreased by 38% from the calculation of the existing conditions.

Error correction method of enterprise product cost accounting based on machine learning algorithm

In order to solve the problems of large error correction result and long-time consumption in traditional cost accounting methods, an error correction method of enterprise product cost accounting based on machine learning algorithm is proposed. By analysing the specific cost chain and accounting error sources of enterprise product production, the influence of uncontrollable factors on accounting error is preliminarily avoided. On this basis, the total error of cost accounting is determined by constructing error measurement model. Finally, the optimal solution of error calculation is obtained by using the support vector machine concept in machine learning algorithm, so as to realise error correction. The experimental results show that the correction time consumption of the proposed method is short, the accuracy is high, and the memory space is small, which indicates that the method has a certain application value and can be widely used in the field of enterprise cost accounting.

A case study on the application of activity-based costing on the inductor component

Abstract— Traditional cost accounting (TCA) is no longer reflecting the current economic reality due to distorted information about the profitability of their orders, products and customers. A new costing method is required to overcome the shortcoming of TCA in the era of rapidly increasing product complexity and diversification. The aim of this work is to apply the method of activity-based costing (ABC) on the inductor component for better accuracy. The work begins by collecting data at electronic industry located at Pahang, Malaysia and the product selected is inductor component. ABC focuses on the costs inherent in the activity -based products to produce, distribute or support the products concerned. Through the method, the work successfully gathered the time spent by operator to complete the task given. The largest time spent is at workstation 1 with 92.12% while the smallest at workstation 2,7, 8 and 14 with 0.1727% respectively. The highest cost of capacity supplied is drum core winding with epoxy activity with MYR 5,869,250.40 and the amount of material used is assigned as the cost driver. As the demand quantity of the product is increase by 10%, the total cost of production is predicted to be MYR 6,365,159.18 while the product cost per unit is MYR 1.50.

Penerapan Metode Activity Based Costing System Dalam Menentukan Tarif Rawat Inap

Abstract. The purpose of this study was to determine the amount of inpatient rates when using the Activity Based Costing method at Abadi Medical Tabanan Hospital. As well as analyzing the large comparison of inpatient room rates between the Activity Based Costing System method and the traditional methods that have been implemented by the Abadi Medical Tabanan Hospital so far. This research is a descriptive study with a quantitative approach. The data collection techniques used in this study were documentation, observation, and interviews. The data analysis method used is by calculating the cost of inpatient services based on traditional cost accounting, calculating the cost of inpatient rooms based on the Activity Based Costing method, where the results of the calculation of the two methods will be compared to the cost of inpatient rooms. The results of the calculation of the cost of inpatient care at the Abadi Medical Tabanan Hospital using the Activity Based Costing System showed that the difference between the lower rates for VIP room 1 was IDR 31,997.07, while the higher rate occurred in VIP Room 2 with a difference of IDR 56,570. , 68, Class 1 IDR 193,765.10, Class 2 IDR 47,881.33 and class 3 IDR 79,375.90.
 Keywords: Activity Based Costing, traditional methods, inpatient rates

In defence of traditional cost and management accounting

The theory and practise of traditional cost and management accounting has been under severe criticism in recent years. Professionals working in industry and academia world over have critically debated over traditional concept’s relevance for cost control, performance appraisal, product costing/pricing and decision-making purposes. Critics contend that in a world class manufacturing environment (WCM) characterised by concepts of just in time (JIT) and total quality management (TQM), traditional costing becomes redundant as a performance measurement, decision making and cost control tool (Johnson,1987). They argue that traditional costing induces dysfunctional behaviour amongst employees because of fear of adverse variances being attributed to them (Birnberg. 1992) and also promotes the concept of cost plus pricing (Kaplan, 1984) which is not relevant in the modern day dynamics where selling prices are decided by market forces. Concepts as target costing and activity based costing are thought of to be more appropriate in today’s manufacturing environment. The impact of these criticisms has had a profound impact on the way this subject is perceived, be it academia or the industry or professional bodies regulating the profession of accounting. Arguments in favour of traditional costing still remain , however, the winds of changes appear continuous .A long and time tested language is being pushed into oblivion, being replaced with tools and techniques of the modern era which have and are being brought forward as betterments over the so called limitations of the traditional structure. The objective of this paper is two fold; 1. To identify various limitations attributed to traditional cost and management accounting in modern competitive environment. To critically examine these various limitations in terms of both assumptions and objectives attributed by critics to the functional domain of cost and management accountancy.