This work was carried out with the aim of designing procedures for calculating and recording costs in the Basic Unit of Cooperative Production "Waldemar Díaz", which allowed adequate planning, control and decision-making. The most significant results showed that the use of activity-based accounting allows the distribution of manufacturing overhead by activity to be done fairly, offering more accurate unit costs. It was shown that it can be very useful for the administration, since it becomes an effective instrument for decision making when determining the cost of each activity in the realization of the product.
Keywords: activity-based costing
INTRODUCTION
It is an indispensable element in any economic management system to ensure the role of cost in the economic planning of the country and fundamentally in the correct management of cooperatives through agile mechanisms that allow their calculation with a high degree of reliability.
It is known to all that the crisis that began in Cuba in the 1990s in the twentieth century had a severe impact on the livestock sector, hitherto largely dependent on imports. This implied a sharp reduction in the availability of the basic resources necessary for agricultural development. Livestock farming begins an accelerated process of deterioration of all its indicators, which caused a decrease in production levels, mainly in the state entities much more committed to this production scheme.
From September 1993, cooperativism in Cuba enters a transcendental stage, with the constitution of Basic Units of Cooperative Production (UBPC) where there were state agricultural companies, a step taken with the objective of moving towards sustainable agriculture that would lead to the achievement of higher levels of efficiency.
The cost constitutes a fundamental indicator for the administration of the resources that a cooperative has in order to generate profits for the benefit of the entity, the collective of cooperative members and workers. Therefore, the design and implementation of a cost system is not limited to implanting models and their methodologies, but must constitute an effective instrument for decision-making, allowing the selection that provides the greatest productive benefit with the lowest level of spending.
A set of factors have influenced to a greater or lesser degree the deterioration that is seen today in this task, requiring consistent action aimed at eradicating them. The cost used as a management instrument should facilitate the assessment of possible decisions to be made, allowing the selection of the one that provides the greatest productive benefit with the minimum of expenses, as well as reducing the risk of making incorrect decisions in short-term market situations or actions. cannot be postponed of a national nature.
The fact that through cost it is possible to measure the behavior of the company's activity and the economy in general allows defining it as an instrument for management, not only for planning its results but as a measure of them to evaluate the behavior of efficiency and effectiveness indicators.
Currently in cooperatives there are difficulties in management, associated with the decision-making process and the information available for it, so that decision-making is not done through management accounting. So it is a necessity that management accounting becomes an effective instrument for planning, control and decision making in the Basic Unit of Cooperative Production "Waldemar Díaz".
The objective of the research is to “Design procedures for calculating and recording costs at the UBPC“ Waldemar Díaz ”that allow adequate planning, control and decision-making.
MATERIALS AND METHODS
High productive and economic efficiency is not achieved by only doing two or three aspects of work on the dairy farm very well, but when the appropriate balance between all the aspects involved is constantly considered and perfected, where human resources are the essential aspect of this productive process. Milk production is a necessity for the development of children, the nutrition of society and especially to improve the quality of nutrition for pregnant women, the sick and the elderly. The way in which a society satisfies this requirement will depend largely on the efficiency and effectiveness in the milk production process. Hence the importance that the companies in charge of obtaining this product, use the most advanced accounting techniques to calculate their production costs.
The study carried out on the entity under investigation in relation to the registration and accumulation of the cost of milk production confirmed the need to use a cost system based on activities for the following reasons:
- Obsolescence in the form of distribution of indirect costs. Does not identify or differentiate direct and indirect costs to the process. The allocation of indirect costs to the product is done arbitrarily.
Proposed procedure to use to apply activity costing.
The proposed procedure was structured into 8 procedures, which were applied to the process of obtaining milk in the dairy "Pozo Redondo" belonging to the UBPC "Waldemar Díaz de La Rosa" of the Majibacoa municipality, Las Tunas during 2005.
1.- Build the product value chain.
For the formation of the value chain, the different types of activities were defined and their classification according to the level of action regarding products in: Primary and Secondary.
VALUE CHAIN
Value Chain
AUXILIARY ACTIVITIES
2.- Define the activities, classify them and prepare the activities map.
This is one of the most important and delicate stages for the application of the ABC cost, so an analysis was carried out to define the most representative activities in each activity center taking into account the ones that generate the most value according to the activity map
For the determination of the activities, the product elaboration process was analyzed, reaching the following classification of activities:
MAIN ACTIVITIES (AP):
- Reproduction: Refers to the entire process that is developed to achieve pregnancy, with the aim of achieving a high reproductive and productive response of the females. Calving, birth and management of the calf (PNMT): It refers to all the activities that are carried out to guarantee a good calving and all those that are carried out once the birth has taken place. Milking: It is the most important activity in which all the works of reproduction, handling, feeding, animal hygiene and habitat are summarized. Feeding:It is based on the needs of energy, proteins, vitamins and minerals, taking into account the purpose to be achieved: maintenance, milk production, pregnancy and body weight gain and will be determined in the dairy cow according to: age, milk production, number lactation, reproductive status, health status and race.
AUXILIARY ACTIVITIES (AA):
- Animal Health: Refers to all the tasks that are carried out systematically to prevent and / or decrease diseases that affect livestock, whether bacterial, viral or parasitic. General management of the herd: This activity is related to the care to be had with livestock, with the aim of achieving an adequate weight, a good productive, reproductive and health status. General Administration: Responsible for organizing, planning, executing and controlling all activities aimed at achieving the objectives and goals outlined in the unit. Sales to customers: Activity that guarantees that the product reaches the customer, production is carried out and that the unit receives the benefit for its delivery.
Activities Map
| Auxiliary Activities | ||||
| Main activities | General Herd Management | Animal health | Sales to Clients | General Administration |
| Reproduction | X | X | - | X |
| Calving, Birth and Calf Management | X | X | - | X |
| Milking | X | X | X | X |
| Feeding | X | X | X | X |
3.- Identify the activity centers and relate them to the activities.
After the main and auxiliary activities were selected, they were associated with the activity centers where they take place.
Activities to develop in the activity centers.
| Activity Center | Activities | Classification |
| Animal production | Reproduction | Principal |
| Calving, birth and handling of the calf | Principal | |
| Milking | Principal | |
| Zootechnical Management | Feeding | Principal |
| Animal health | Assistant | |
| General herd management | Assistant | |
| General Administration | Selling to clients | Assistant |
| General Administration | Assistant |
4.- Collect the costs (both direct and indirect) and associate them to each activity.
The collection of expenses associated with each activity was carried out from the primary information issued by the accounting area during the period under analysis.
It starts from the location of the costs incurred to obtain the product in each activity center into which the dairy is divided, offering the total amount of indirect costs, as shown in the following table.
Costs of the activity center “Pozo Redondo” U / M: Pesos
| Expense Items | Classification | Amount |
| Raw Materials and Materials | Indirect | 454.43 |
| I think | Direct | 5626.81 |
| Other foods | Direct | 17.32 |
| Medicine | Direct | 605.40 |
| Fuel | Indirect | 175.75 |
| Provision of pregnancy services | Direct | 2059.25 |
| Milk service provision | Direct | 992.10 |
| Provision of machinery services | Indirect | 54.12 |
| Other expenses | Indirect | 1232.31 |
| Deaths | Direct | 2495.50 |
| Wages | Direct | 21063.98 |
| Social Security | Direct | 2632.99 |
| Total | ─ | 37 409.96 |
Below are the distribution criteria used for the distribution of indirect expenses among the different activities carried out by each activity center.
Distribution criteria.
| Indirect expenses | Distribution criteria |
| Raw materials and materials | Cost of materials consumed. |
| Fuel | Amount used |
| Machinery service provision | Cost of services received |
| Other expenses | Cost of services received |
To define the criteria established in the previous table, interviews were conducted with specialists, managers and workers with more experience. The information obtained during this process was collated with the UBPC Board of Directors and with specialists from the Provincial Delegation of Agriculture.
The indirect costs associated with the main and auxiliary activities taking into account the distribution criteria defined above are the following.
Indirect costs assigned to the activities of each activity center.
| Activity centers | Activities | Indirect Expense Elements. U / M: Weights | |||||
| Mat. P. and Materials | Comb. | Prest. Ser. Machinery | Other expenses | Subtotal | Total | ||
| Production
Animal |
Reproduction | 22.72 | 22.72 | 182.50 | |||
| PNMT | 22.72 | 26.36 | 61.62 | 110.70 | |||
| Milking | 22.72 | 26.36 | 49.08 | ||||
| Driving
Zootechnician |
Feeding | 68.16 | 114.24 | 40.59 | 616.15 | 839.14 | 1152.93 |
| Animal health | 22.72 | 8.79 | 31.51 | ||||
| General management of the herd | 159.05 | 123.23 | 282.28 | ||||
| General Administration | Admin. Gral | 113.62 | 10.82 | 431.31 | 555.75 | 581.18 | |
| Customer sales | 22.72 | 2.71 | 25.43 | ||||
| Total | 454.43 | 175.75 | 54.12 | 1232.31 | 1916.61 |
5.- Distribute the costs assigned to the auxiliary activities among the main activities
This is a very important procedure since it guarantees that the main activities are paid for precisely by the resources they consume. It is recommended to use distribution criteria taking into account the criteria of experts, by observing the actions to be carried out in each activity.
Below is the proposal of the distribution criteria to be used for the distribution of the costs of the auxiliary activities to the main ones with the objective of determining the cost of the main activities.
Distribution criteria for auxiliary activities to the main ones
| Activity Center | Auxiliary activities | Distribution criteria |
| Driving
Zootechnician |
Animal health | It is distributed among the Reproduction, PNMT, Milking and Feeding activities at a rate of 5, 5, 5 and 85% respectively. |
| General herd management | It is distributed among the Reproduction, PNMT, Milking and Feeding activities at a rate of 25%. | |
| General Administration | Sales to Clients | It is distributed between the Milking and Feeding activities in equal parts. |
| General Administration | It is distributed among the Reproduction, PNMT, Milking and Feeding activities at a rate of 25%. |
Once the distribution criteria have been defined for each activity, the costs associated with the auxiliary activities will be assigned to the main activities, which is shown below.
Distribution of the indirect costs of the AA to the main activities.
| Activity Center | Main activities | Auxiliary Activities. U / M: Weights | ||||
| Animal health | General Management of the herd | Sales to clients | Admin. general | Total | ||
|
Production Animal |
Reproduction | 1.57 | 70.57 | - | 138,937 | 211,077 |
| PNMT | 1.57 | 70.57 | - | 138,937 | 211,077 | |
| Milking | 1.57 | 70.57 | 12,715 | 138,937 | 223,792 | |
| Zootechnical Management | Feeding | 26.80 | 70.57 | 12,715 | 138,937 | 249,022 |
| Total | 31.51 | 282.28 | 25.43 | 555.75 | 894.97 |
6.- Calculation of the total cost associated with the main activities.
For this calculation the cost assigned directly to each main activity will be taken into account and the costs received from the auxiliary activities will be added, remaining as follows:
| Main activities | Directly assigned cost | Assigned cost of ancillary activities | Total cost |
| Reproduction | 22.72 | 211,077 | 233,797 |
| PNMT | 110.70 | 211,077 | 321,777 |
| Milking | 49.08 | 223,792 | 272,872 |
| Feeding | 839.14 | 249,022 | 1088,162 |
| Total | 1021.64 | 894.97 | 1916.61 |
RESULTS AND DISCUSSION
The proposed procedure for calculating the cost incurred in milk production at the reference UBPC for this work is completed with the determination of the total cost of milk and the unit cost of producing each liter of milk; what has been identified with procedures 7 and 8.
7.- Determination of the total cost of milk.
The total cost of milk is obtained from the sum of the direct and indirect costs; that is, the elements directly attributed to the product and the indirect elements assigned to each main activity.
The imputation of the costs of the main activities to the product is made from the cost inductors, which allow the cost of each activity to be related to the total cost of the product.
To determine the cost drivers, the criteria of the specialists and experts were taken into account for the fair distribution of indirect costs to each activity, taking into account the cause-effect relationship (consumption of resources-activity-product).
The inductors defined to impute the indirect costs of each activity to the product are shown below, as well as the unit cost of each one. This cost was calculated from the formula described in the previous section, dividing the total cost of each main activity by the number of its inducer.
Determination of cost inductors.
| Main activities | Inductor | Inductor number | Inductor unit cost ($) |
| Reproduction | Number of cows born | 49 | 4.7713673 |
| PNMT | Total births | 52 | 6.1880192 |
| Milking | Milking cows | 22 | 12.403272 |
| Feeding | Total animals fed directly to milk production (cows and calves) |
83 |
13.110385 |
Once the inductor has been determined to impute the cost of each main activity to the product, the total cost of the product is calculated.
Total cost calculation. U / M: Weights
| Expense Items | cost |
| Direct Costs: | |
| I think | 5626.81 |
| Other foods | 17.32 |
| Medicine | 605.40 |
| Provision of pregnancy services | 2059.25 |
| Provision of milk services | 992.10 |
| Deaths | 2495.50 |
| Salary | 21063.98 |
| Social Security | 2632.99 |
| Subtotal | 35493.35 |
| Indirect costs: | |
| Reproduction | 233,797 |
| PNMT | 321,777 |
| Milking | 272,872 |
| Feeding | 1088,162 |
| Subtotal | 1916.61 |
| Total cost | 37409.96 |
8.- Calculation of the cost per liter of milk.
The cost of a liter of milk will be obtained by dividing the total cost by the number of liters of milk produced, as shown below.
Unit cost calculation. U / M: Weights
| Total cost of milk | 37409.96 |
| # of liters produced | 38657 |
| Unit cost | 0.97 |
Once the cost of producing a liter of milk under the activity costing philosophy has been determined, it can be compared with the cost obtained by the traditional method:
| ABC method | Traditional Method | |
| Total cost of milk | $ 37409.96 | $ 40 497.29 |
| # of liters produced | 38657 | 38657 |
| Unit cost | $ 0.97 | $ 1.05 |
Even though it is appreciated that a lower cost per liter of milk is obtained, the relevance in the use of activity-based costing is not in the economic benefits but in its effectiveness in accumulating costs and in the management of activities that contribute to using the resources efficiently, allowing the following aspects to be analyzed:
- Which activities consume the most resources? How much does the product cost in each area of responsibility? How much does each part of the production process of a product cost?
Recording of expenses for activities.
Management accounting is a branch of accounting that aims to capture, measure and value internal circulation, as well as its rationalization and control in order to provide relevant information for decision-making in cooperatives. Management accounting recognizes its basic foundation in adequate knowledge, recording and interpretation of costs.
Taking into account the proposal made previously for the recording of expenses in an accounting by activities, starting from a breakdown by activities, areas of responsibility and by elements, the accounting of one of the elements of expenses (fuel) incurred is shown below. in the period analyzed.
| Accounts and Details | Partial | Should | To have | ||||||||
| 705 | Animal Production in Process | $ 175.75 | |||||||||
| xx | Dairy farm "Round well" | $ 175.75 | |||||||||
| # one | C / A Animal Production | $ 52.72 | |||||||||
| xx | PNMT | $ 26.36 | |||||||||
| xx | Milking | $ 26.36 | |||||||||
| # two | C / A Zootechnical Management | $ 123.03 | |||||||||
| xx | Feeding | $ 114.24 | |||||||||
| xx | Animal health | $ 8.79 | |||||||||
| 191 | Inventory of Raw Materials, Materials and others | $ 175.75 | |||||||||
| 300 | Fuel | $ 175.75 | |||||||||
| Accounting the fuel consumption corresponding to the year 2005. | |||||||||||
If the ultimate objective of management accounting in the current cooperative were to be made more precise, it could be said that it would allow rational decisions to be made that make competitiveness possible, for which it must take into account the continuous improvement of internal production processes; All of this is achieved through control and strategic cost management in all functions and segments of the cooperative.
CONCLUSIONS
The proposed procedure for recording expenses in the non-state sector, specifically, in Basic Units of Cooperative Production dedicated to livestock, demonstrates that the application of accounting by activities is feasible, providing sufficient information for a comprehensive analysis of costs; it allows the livestock activity to reach higher levels of efficiency and effectiveness in its management, which facilitates the decision-making process, eliminating that activity in the value chain that does not generate or add value and constitutes an effective instrument in the field Cost Accounting and Business Management for decision making.
BIBLIOGRAPHY
- Iberoamerican Glossary of Management Accounting. 1999.Amat, Oriol and Soldevila, Pilar. Accounting and cost management. 2000Brimson, J; A. Accounting for activities. Alfaomega grupo editor, SA de V. México. 1997 Collective of authors. Cooperativism and administration: A challenge in the new millennium. 2004 Kaplan and Cooper Article. ABC Method for the Application of Expenses. Page 11-12Lorino P. Strategic management control: Management by activities, Mexico, alfaomega Grupo Editor, 194 pp. 1995.Ministry of Agriculture. Economic area. Non-State Accounting Manual. December 2004. Ministry of Agriculture. National System of Agricultural Production Cooperatives.
