Proposed accounting framework for the use of the sticky behavior model for costs in determining the most cost-effective activity driver (An Empirical Study)

shaheen, mohamed 


Introduction: The current business environment is dynamic and adaptable to changing circumstances, so that companies operating in this environment can continue to achieve their objectives. They have found themselves required to constantly update their financial, technological, administrative, financial and all aspects of their activity. For these companies to succeed in the development and modernization required to comply with the changing environment in which they operate, there is a need for a large amount of information to assist them in completing the necessary updates and development, which helps in the planning of this development and monitoring, For the success of the development plan. Cost behavior refers to the way costs respond to changes in the volume of activity, so understanding cost behavior is essential for managers and accountants to use information in decision-making processes. The study of cost behavior has emerged as one of the most important topics related to new research in accounting, and the traditional literature associated with the subject of cost behavior has assumed a mechanical relationship between the cost and cost engine. The traditional model for cost component behavior analysis divides costs into variable cost elements and fixed cost components, where this model assumes that variable costs change proportionately to the volume of activity, while fixed costs remain unchanged within the appropriate range. The use of a larger number of cost drives generally results in a higher resolution of the cost of the product. Therefore, the choice of cost drivers depends largely on the company's preferences and the availability of resources to implement the entry of the activity. This research examines how cost engines are selected to increase the efficiency and accuracy of the cost system based on a better understanding of cost behavior by examining the pattern of costs with irregular behavior and building a model that helps to select cost pools more systematically. (2) Research problem: That changes in the current business environment are the result of increased globalization and free movement of goods and services between States, as well as significant changes in the products and services they provide and the processes they manufacture. Companies need to adjust their products and services, and their industrial processes to meet rapid changes to gain more competitive advantage and improve their competitive position in the local, regional and global market. With the increasing degree of competition faced by companies in the market, they are trying to meet the requirements of customers by providing high quality products at competitive prices and supports the achievement of this goal in the current business environment, companies focus on the sale and distribution activities, engineering specifications of the commodity, With the highest level of efficiency that ensures the achievement of the objectives of the company. Based on the above, it is possible to formulate the problem of research specifically in the form of the following set of questions: • Does the irregular behavior of costs extend to the HCCs that are homogeneous and divided as cost pools in relation to cost drivers for these complexes? • If the irregular model is found in indirect industrial cost items, what is the possibility of using this model in choosing the most efficient cost drivers? • In the case of irregular cost behavior, what is the effect of this variation on the traditional cost behavior model on assumptions and the theoretical and practical framework for equivalence analysis? (3) The importance of research: The importance of this research is based on the following considerations: 1. The lack of studies and research in Arabic dealing with the study of the behavior of the elements of non-regular costs in general, and those related to the behavior of elements of indirect industrial costs and their relation to the cost engine in particular. 2. Providing an objective accounting framework based on the non-standard cost behavior model to select the most efficient cost drivers that help increase accuracy while not significantly increasing the cost of implementing the cost system. 3. To sensitize the management of Egyptian companies to the importance of using the irregular behavior model of indirect industrial cost components in the selection of cost engines in a way that helps the accuracy of the information provided by the cost system and thus contribute to effective decision making which helps them to achieve competitive advantages both in the local market or Foreign markets. (4) Research Objectives: This research seeks to achieve the following objectives: • Studying the relationship between the elements of indirect industrial costs classified in a variety of different cost pools and the different cost drivers of these complexes to determine whether the irregular behavior model is also present in relation to indirect industrial costs. • Provide a proposed accounting framework that helps to select cost drivers that increase the accuracy of measurement of product costs without increasing the application costs of the system depending on the choice of engine that reduces the relationship of irregularity in cost behavior. • Demonstrate and explain the effects of irregularity in cost elements on cost analyzes, particularly equivalence analysis. • Apply the proposed framework based on irregular behavior to choose the appropriate cost drivers for cost behavior in the cost pools and to indicate the effects of this choice on the different accuracy of cost measurement. (5) Research Methodology: To achieve the objectives of the previous research, will be used to mix the use of two main approaches: Inductive Approach: By reference to the periodicals, references, scientific messages and studies that dealt with the subject of irregular behavior of costs, in order to study the features of the irregular behavior of the costs and the work of an analytical study of the motives of this behavior and benefit from them in the development and construction of the proposed accounting model to measure the degree of irregularity of the cost elements or not As well as the impact of the existence of this irregular behavior of costs on the analysis of equivalence and changes that it leaves in the intellectual construction of this analysis, which serves the first three objectives in this W. The applied method: It is used by applying the proposed model to verify the existence of irregular behavior at the level of indirect industrial costs using data extracted from the books of one of the industrial companies operating in the Arab Republic of Egypt, as well as using this model in selecting the most effective cost engines in the company and measuring the degree The accuracy before and after application and the identification of material changes occurring as a result of application of the proposed model. (6) Research Findings and Recommendations: The study of the behavior of cost elements occupies a large part of the attention of decision makers, because understanding this behavior positively affects many situations that require decisions related to predicting costs and profits in the coming periods. The traditional model for analyzing the behavior of cost elements has received many criticisms. The most important of these is that the assumption of linearity in the relationship of change in costs according to the change in the volume of activity does not exist in the working life significantly. Recent research and studies have been interested in introducing a new model of cost behavior interpretation, called the Non-Regular Cost Behavior Model, which focuses on the importance of management decisions regarding temporary idle energy retention until the demand conditions for the company's products improve. In this research, the researcher attempted to rationalize the model of the irregular behavior of indirect industrial cost elements, to try to understand the mechanism and determinants of the irregular behavior of the cost elements in the companies, as well as to attempt to develop a quantitative model to measure the degree of irregularity in the behavior of industrial cost elements indirect. The researcher then explained how to apply the proposed model to measure the degree of irregularity in the behavior of the cost elements in one of the economic groups working in the field of producing appliances and appliances in the Arab Republic of Egypt to clarify how to apply the model and identify the quality of behavior within the company's cost complexes. Based on the results obtained from the application of the irregular behavior model, these results were used in the decision to choose the most effective cost driver in relation to the cost pool. The researcher concluded that a set of observations related to the practical application of the proposed model of behavior the most important of which are: 1. If the change in indirect industrial costs with an increase in the cost of the motor of the cost utilized during the period by 1% is greater than the change in indirect industrial costs with a decrease in the capacity of the engine of the cost utilized by the same ratio of 1% + (Or <0), the cost in this case is of a sticky cost behavior. 2. Conversely, if the change in indirect industrial costs with a 1% (1%) increase in engine power capacity is less than the change in indirect industrial costs and the volume of energy used by the motor of the cost motor is less than 1% β1 + β2 <β1) or (β2 <0), the cost in this case is of an anti-sticky cost. 3. The irregularity of cost behavior (ie, the cost is a regular behavior) does not exist if the change in industrial costs with 1% increase in revenue equals the change in indirect industrial costs, the ratio is 1% (+) ie (1 = β1 +) or (= 0).

Other data

Keywords sticky behavior - most cost-effective activity driver
Issue Date Jul-2018
Publisher مجلة الفكر المحاسبي ، قسم المحاسبة والمراجعة جامعة عين شمس
Journal مجلة الفكر المحاسبي ، قسم المحاسبة والمراجعة جامعة عين شمس ، العدد الثاني، السنة الثانية والعشرون ، يوليو 2018. 

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