Management control mechanisms and cost engineering a necessary sequence to improve the decisional process

Abstract

Cost analysis is an integral part of the scope of cost accounting. As an instrument for collecting and analyzing information, it represents the core of the management control information system, despite its contributions, it has been the subject of criticism concerning the degree of relevance of the decisions attributed by the managers, it was developed in the 1970s with the development of new information and communication technologies and the creation of software able to analyze data. These mechanisms have the drawback of generating deviations from the real costs of the products, which leads to inadequate decisions that could harm the cause (resources consumed) and effect (products produced) relationship. Cost accounting is no longer introduced today as a decision-making aid instrument likely to influence the behavior, but as a posteriori control instrument making it possible to adjust economic trends, the objective ultimate is the formation of costs while taking into account the relevance of the methods implemented given the specificities of organizations in a context of increasing evolution, this explains its passage to management accounting. (Zaam, 2015). This makes it possible to question the impact of contingent criteria for changing costs on performance. To resolve this observation, it is necessary to expose the different techniques for analyzing costs and their importance in the process of taking reliable decision. The concept of cost is present today in all entities and its relevance lies in the accounting model implemented. A firm can calculate the cost of different ways (full cost, partial costs, target cost, standard cost), the multiplicity of instruments will guide the design of the information system. This theoretical article is devoted to introduce the important pillar of management control that is cost engineering and its impact on the performance of the firm, the research methodology will be carried out according to a positivist approach, focusing on the shortcomings of the classic model and the extension of activity-based and revenue maximizing methods.

JEL Classification : M41, M49

Paper type: Theoretical Research