The Integration of Management Accounting Techniques in the Functional-based Costing System

With the methodological development of cost accounting, there is a transition from the spatial plane of cost grouping, which has traditionally been considered as a “functional” one, to the process evaluation. At the same time, the development of the concept of Functional-Based Costing is making a transition today from grouping costs based on structural units of an enterprise to an integral system of cost accounting methods, based on generalized functional areas of economic processes (such as automation, HR, transport logistics, R&D, compliance etc.). In the economy of an enterprise, they include a much wider range of processes rather than just the work of a specialized structural unit of that enterprise. In contrast to the previously developed costing techniques, which predominantly consisted of the new methods of cost analysis, Functional-Based Costing is not an alternative direction in management accounting methodology but is a synthetic framework that allows to integrate the results of other costing approaches that are already known and researched to date. At the same time, the functional unity of processes and resources allows us to consider the development of the approach both in the context of further dissemination of Resource Consumption Accounting as well as in the context of the development of Life Cycle Costing.

1. Sarantseva E. G., Davydova V. V. Innovative activity as a management accounting object. Mezhdunarodnyi bukhgalterskii uchet = International Accounting. 2012;(24):23–29. (In Russ.).

2. Fertie J., Freathy P., Tan E.-L. Logistics costing techniques and their application to a Singaporean wholesaler. A Leading Journal of Supply Chain Management. 2001;(4):117–131.

3. Panakhov A. U. Intermediate function costing (the IT function case). Mezhdunarodnyi bukhgalterskii uchet = International Accounting. 2017;(21):1224–1242. (In Russ.).

4. Larionov A. D. Normative accounting method. Essence, experience and implementation problems. St. Petersburg: SDNTP; 1986. 24 p. (In Russ.).

5. Kaplan R. S., Anderson S. R. Time-driven activity-based costing. Harvard Business Review. 2004;(11):131–138.

6. Polejewski Sh. A. German cost accounting vs. activity-based costing. Saint Paul, Minnesota: University of St. Thomas; 2009. 8 p.

7. Shenghua Q., Dong Y. The application of resource consumption accounting in cost management of manufacturing engineering project. University Park, PA, USA: Pennsylvania State University; 2011. 5 p.

8. Chen X., Koebel B. M. Fixed cost, variable cost, markups and returns to scale. Annals of Economics and Statistics. 2017;(127):61–94.

9. Okano K. Life cycle costing — an approach to life cycle cost management: A consideration from historical development. Asia Pacifìc Management Review. 2001;(6):317–341.

10. Zehetner K., Eschenbach S. Closing the Gap between U.S. and German Managerial Accounting. Humanities and Social Sciences Review. 2017;(07):461–473.

11. Shannon L. Charles, Hansen D. R. An evaluation of activity-based costing and functional-based costing: A game-theoretic approach. International Journal of Production Economics. 2008;(113):282–296.

12. Belenov O. N., Bulgakova S. V. Accounting and analytical support of the marketing activities of the economic entity. Economic Analysis: Theory and Practice. 2015;(412):24–34. (In Russ.).

13. Hardesty S. D., Leff P. Determining marketing costs and returns in alternative marketing channels. Oakland, CA: University of California; 2016. 124 p.

14. Kivinen P., Lukka A. Logistics cost structure and performance in the new concept. Lappeenranta, Finland: Lappeenranta University of Technology; 2004. 97 p.

15. Krajnc J., Logozar K., Korosec B. Activity-based management of logistic costs in a manufacturing company: A case of increased visibility of logistic costs in a slovenian paper manufacturing company. Promet — Traffic & Transportation. 2012;(24):15–24.

16. Shivangi Shekhar, Umesh Kumar. Review of various software cost estimation techniques. International Journal of Computer Applications. 2016;(141):31–34.

17. Stead H. The costs of technological innovation Author links open overlay panel. Research Policy. 1976;(5):2–9.

18. Weber J. A. Managing the marketing budget in a cost-constrained environment. Industrial Marketing Management. 2002;(31):705–717.

19. West D., Prendergast G. Advertising and promotions budgeting and the role of risk. European Journal of Marketing. 2009;(43):1457–1476.

20. Leontief W. Input-output economics. Oxford: Oxford University Press; 1986. 436 p.

21. Mel’nik M.V., Pozdeev V. L. Theory of economic analysis. Moscow: Urait; 2014. 261 p. (In Russ.).

22. Kol’vakh O.I., Sbitneva S. A. The matrix model of financial accounting and forecasting based on it. Audit i finansovyi analiz = Audit and financial analysis. 2013;(2):133–145. (In Russ.).

23. Lenzen M., Lundie S. Constructing enterprise input-output tables — a case study of New Zealand dairy products. Journal of Economic Structures. 2012;(6):2–15.

24. Ul’yanova N. V. Multivaluation of non-financial current assets in process management. Audit = Auditing. 2015;(12):9–12. (In Russ.).