Author:Nikitina, Olga Aleksandrovna


The management of the enterprise is an activity, which is directed on the regulation of manufacturing processes in accordance with the intended purpose. The purpose of enterprise's, company's or organization's activity consists in its progressive development. The means to achieve this purpose consists in the maximization of profits, in particular, through cost management system. Thus, in the current economic conditions, the success of an enterprise largely depends on the efficiency of the cost management system (Litovskaya, 2002; Nikitina, 2005). The relevance of the chosen topic is connected with the fact that budget planning and control play an important role in the development of a company and in making more profit. Managing a company is impossible without financial planning of its work, as well as monitoring the implementation of the developed financial plans. Therefore, budget planning and monitoring of the results of a company's operation become impossible without the formation of a budget as the main tool for flexible management.


In the work of Rasskazova-Nikolaeva (2014), the essence of the cost-accounting method of direct-costing is that permanent overhead costs are not included in the cost of production, but are directly attributed to the profit and loss account in the period when they occurred (Rasskazova-Nikolaeva, 2014). The advantages of this method are that the necessary information can be obtained from regular financial reports without creating additional accounting procedures. The profit of the period does not depend on the constant overhead costs when the reserve balances change. The laboriousness of distribution of overhead costs is reduced; it becomes possible to determine the contribution of each type of product to the formation of the profit of the enterprise. Disadvantages of this method are connected with the fact that many types of costs cannot be unambiguously assigned to the category of variables or constants, with lack of attention to constant costs and distortion of the financial result due to understating or overstating the value of previously produced products. The method creates an illusion of profitability of technologically complex projects that require significant investment. Kostina et al. (2017) outline such methods of cost accounting as standard costing and cost benchmarking (Kostina et al., 2017). Advantages of standard-costing are in the formation of the necessary information base for analysis and control of costs, visibility in reflecting deviations from the plan in the process of formation of costs, minimization of accounting work associated with the calculation of cost, timely provision of managers with information on expected costs of production. But the method is only applicable for periodically repeating costs. The success of its application depends on the composition and quality of the regulatory framework. It is impossible to set norms for individual types of costs. The essence of benchmarking is the ability to comprehensively assess the management of costs in an enterprise in comparison with a reference enterprise, which is a serious prerequisite for the gradual improvement of cost management based on the experience and technologies of other enterprises, but in the event of an incorrect choice of a benchmarking enterprise, the effectiveness of the method is reduced. All considered methods of cost accounting do not allow to track daily costs in the production process, are characterized by high labor intensity and do not have mechanisms for making managerial decisions while the use of the budgeting method makes it possible for the process of making managerial decisions in the conditions of limited financial resources to become flexible. In addition, it allows evaluating not only past costs but also the present and future ones.


The market conditions and tough competition increase the need for new cost management mechanisms based on budget planning and control methods. In our view, the use of the budgeting method for running costs is stipulated due to the following requirements (Nikitina 2005):

  1. The process of responding to the changing production conditions requires daily cost tracking of the enterprise, its divisions, and particular operations, and is characterized by a high work labor input while there are no tools of managerial decision-making. Not so much the management information creation process becomes important, as the development of rapid response mechanisms.

  2. Increasing the flexibility of many industries towards...

To continue reading