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

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

Faiza Ibrahim Mahmoud Al-Ghabbana    

Higher Institute of Accounting & Financial Studies

Abstract

The changes in the contemporary business environment have led to the need to develop traditional cost accounting systems applied to industrial firms, which focus mainly on the cost of manufacturing and ways to allocate indirect manufacturing costs to products. The main problem of research has been that traditional cost accounting methods are no longer suitable for application in modern business conditions where there is an increase in the use of technology and dynamic changes in customers’ preferences, global competition conditions, as well as challenges to the survival of industrial firms in the market. Modern cost management techniques therefore focus on cost reduction, as modern manufacturing companies cannot influence market prices but can influence their costs in current working conditions as they are more appropriate while focusing on costs throughout the product life cycle. The research aims to address modern cost management techniques and study their application in the Sanabel Iraq pastry Company with the aim of developing a method for estimating the costs of production in its plants, which has become the right solution to problems in them. Cost-management techniques are healthier than traditional methods of distributing indirect costs in proportion to the actual size of each activity rather than evenly distributed between the activities and the products. It is also important to research the quality of appropriate cost management techniques to distribute and redistribute costs per activity based on the data generated for production processes and to assist in the proper estimation and distribution of costs at all stages of manufacture. The research concluded that modern cost management techniques should be applied in conjunction with traditional cost accounting systems that provide short-term cost information, starting from the activity based coting technique and then applying other  appropriate modern cost management technologies throughout the product life cycle and all the cost causes of operations and activities can be defined in detail in the company.

DOI:10.52113/6/2021-11-3/259-277

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