Development of Variable Costing-Based Cost Control Guidelines as an Efficiency Strategy in the Automotive Manufacturing Industry
Bayu Sukmo*
Rida Prihatni
Ayatulloh Michael Musyaffi
PT XYZ, a global automotive compressor manufacturer, faces significant challenges in cost control, marked by a budget deviation of Rp42.6 billion in the 2024 financial year. A reactive reporting system, sub-optimal variable costing methods, and the absence of standard guidelines have resulted in inaccurate cost information and hindered strategic decision-making. This study aims to develop systematic, structured, and applicable cost control guidelines based on variable costing to improve the accuracy of cost information and support cost efficiency at PT XYZ. The study employs a Research and Development (R&D) methodology using the ADDIE model (Analyze, Design, Develop, Implement, Evaluate). Qualitative data collection was conducted through semi-structured interviews with management and relevant staff, observation of reporting workflows, and a review of the company's budget documents and Standard Operating Procedures (SOPs). The study produced integrated cost control guidelines covering role clarity, the control cycle, report formats, and evaluation mechanisms. Implementation results indicate that these guidelines are highly feasible (score 93.3%) and highly practical (score 89.9%). Their effectiveness is demonstrated by a significant reduction in cost deviation from 15.8% (FY2024) to 2% (FY2025), as well as increased accountability through the requirement for monthly cost analysis in every work unit. The variable costing-based cost control guidelines developed have proven effective in enhancing transparency, accountability, and the accuracy of cost information, thereby significantly reducing budget variances. These guidelines have the potential to serve as a model for other manufacturing companies facing similar challenges.
Atkinson, A. A., Kaplan, R. S., & Young, S. M. (2004). Management Accounting. Pearson Prentice Hall.
Donaldson, L., & Davis, J. H. (1991). Stewardship Theory or Agency Theory: CEO Governance and Shareholder Returns. Australian Journal of Management, 16(1), 49–64. https://doi.org/10.1177/031289629101600103
Drury, C., & Tayles, M. (2021). Management and Cost Accounting. Cengage.
Fähndrich, J. (2023). A literature review on the impact of digitalisation on management control. Journal of Management Control, 34(1), 9–65. https://doi.org/10.1007/s00187-022-00349-4
Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2021). Managerial accounting. McGraw-Hill.
Gelinas, U. J., Dull, R. B., & Wheeler, P. (2018). Accounting Information Systems. Cengage Learning Australia.
Hansen, D., Mowen, M., & Guan, L. (2007). Cost Management: Accounting and Control. Cengage Learning.
Horngren, C. T., Datar, S. M., & Foster, G. (2006). Cost Accounting: A Managerial Emphasis. Pearson Prentice Hall.
Imai, M. (1986). Kaizen: The Key To Japan’s Competitive Success. McGraw-Hill Education. https://books.google.co.id/books?id=gqg9ngEACAAJ
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
Kaplan, R. S., & Cooper, R. (1998). Cost & Effect: Using Integrated Cost Systems to Drive Profitability and Performance. Harvard Business School Press.
Komariyah, F. (2024). Analysis Of The Effect Of Implementing A Digital Technology-Based Accounting System On The Financial Performance Of Msme’s In Indonesia. Transekonomika: Akuntansi, Bisnis Dan Keuangan, 4(6), 1220–1226. https://doi.org/10.55047/transekonomika.v4i6.805
Merchant, K. A., & Van der Stede, W. A. (2007). Management control systems: performance measurement, evaluation and incentives. Pearson education.
Romney, M., Romney, M. B., Steinbart, P. J., Summers, S. L., & Wood, D. A. (2020). Accounting Information Systems. Pearson Education Limited.
Shank, J. K., & Govindarajan, V. (1993). Strategic Cost Management: The New Tool for Competitive Advantage. Free Press.
Sitanggang, D. R. B., Silaban, N. P. S., Apriyanti, P., Megawati, P., & Suryadi, N. (2023). Behavioral Accounting Aspects in Profit Planning and Budgeting . Research in Accounting Journal (RAJ) , 4(2 SE-Articles), 40–48. https://doi.org/10.37385/raj.v3i2.3175