A new decade for social changes

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A new decade

for social changes

ISSN 2668-7798

www.techniumscience.com

Vol. 36, 2022

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The Role of Product Life Cycle Balancing in Reducing Costs:

Iraqi's experience

Asaad Mohammed Ali Wahhab¹, Zahraa Yahya Abd Zaid², Zahraa Ali Jaafar³

1 2 3College of Administration and Economics, University of Karbala, Iraq

asaad.m@uokerbala.edu.iq, zahraa.yahya@s.uokerbala.edu.iq, zahraa.jaafar@s.uokerbala.edu.iq

Abstract. The current research aims to present a cognitive discussion of one of the modern strategic techniques in the field of cost and management accounting, which is represented by the product life cycle balancing technique, and to indicate the role it plays in terms of reducing the costs of laboratory products, the research sample, mainly if time is used as a cost vector in its application, with Maintaining its quality, as well as assisting the administration in making various decisions by calculating the cost more accurately than traditional methods. The General Company for Electrical and Electronic Industries in Baghdad was chosen to achieve this goal.

One of its laboratories was represented by the air-cooled engine production plant in Al-Waziriya as a sample. For the research, the researcher relied when applying this technique on data and information obtained from the laboratory records of the research sample, as well as visits and field coexistence of researchers in the above laboratory, interviewing officials and individuals working in it, with a view of cost reports, accounting records, and time cards related to The lab, to apply the above technique. The research concluded that the air-cooled engine production plant suffers from the absence of any features of the application of modern strategic techniques that are concerned with reducing costs, the most important of which is the product life cycle technology and preparing the budget in its shadow and by using time as a cost vector through which the costs of the laboratory products can be reduced, the research sample, as well as On the lack of a clear role for the activity of the research and development department, to follow up the changes and developments witnessed by the contemporary business environment, in which the laboratory has become directed by the customer, in addition to the fact that the use of modern technologies in the field of cost and management accounting would contribute to keeping pace with progress, development and growth in the industrial and commercial reality.

Keywords. product life cycle balancing technique, time-oriented product life cycle balancing technique, cost reduction

1. Introduction

The contemporary business environment is characterized by rapid developments and continuous changes, highlighted by the globalization of markets, intense competition, technological development, and others, which made stories cast a shadow on customers who interacted extensively with them and in a way that may be unprecedentedly represented in the fluctuation of their tastes, instability of their desires, and the growth of their needs. And the high ceiling of their requirements is searching for products and services that meet those Technium Social Sciences Journal

Vol. 36, 42-60, October, 2022 ISSN: 2668-7798 www.techniumscience.com

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requirements at low prices, high quality, and various characteristics. On the other hand, economic units seeking success cannot achieve what they aspire to if they continue to apply traditional systems and approaches in the field of cost and management accounting because those systems have become unable to provide the appropriate information that enables economic units to achieve the desired success in light of the above developments. Also, in light of the intense competition, the ability of monetary units to influence the field of revenues has become limited, which prompted them to focus on the hidden side to achieve profitability represented in cost and how to lead it, in addition to the fact that there is a characteristic that distinguishes the competition market more than ever before. It is represented in the high demand by customers for products that are of high quality while maintaining the level of prices in general. Time not only contributes to the process of pricing products but is considered a means to reduce costs in the long run and, as a result, leads to increased profits. Economic units, when they want to implement any activity, should determine the amount of time required and necessary to implement it, which is the optimal time to provide products and services to the minimum possible while maintaining quality, provided that this is done according to a strategic perspective, so it has become imperative to search for technologies The modern strategy in the field of cost and management accounting that is consistent and consistent with those developments and changes referred to and responsive to them. One of these techniques is (the product life cycle balancing technique), especially if it is time oriented. This technology is one of the most critical techniques that aim to produce products that meet the desires and requirements of customers after the (market) has become the solid and leading guide for the process of making pricing decisions due to the multiplicity of types of products offered in the market by competitors with low prices, which led the economic units to The attempt to reach the cost of production to the level of the planned expenditure, which in turn is preferred to promise the application of the product life cycle balancing technique. As a result, this is reflected in the reduction of production costs for economic units.

2. Background

Al-Shaabani’s study (2010) focused on reducing costs by reducing costs to maintain the market position of the company and ensuring its sustainability. Also, the change in the structure of production in general and the design of the expenses, in particular, led to the transition from traditional cost systems to cost systems Modern; this transformation was accompanied by a change in the strategies adopted by the management in reducing costs, as the classic strategy are no longer feasible, taking into account the principle of cost-benefit in this transformation.

The product is accurately determining the price of the product and choosing the method that suits the management of these costs and in a manner in which the cost is reduced while maintaining high quality, which helps the comprehensive cost model for the product life cycle.

Cost and pricing management in providing essential and appropriate information for it. On several bases, such as value and differentiation of the different concepts to prepare the product life cycle budget and cost based on cost management activities under this product, including To achieve cost reduction and enhance customer satisfaction, and according to the study of Khidr (2913), it dealt with cost reduction using the product life cycle cost method. It was noticed that there is a large proportion of the cost incurred during the total life cycle of the product, which is a future mandatory cost arising from decisions taken in the research phase. Therefore, decisions at this stage are essential and decisive. The use of value chain technology when implementing the cost method based on the total life cycle of the product contributes to reducing Technium Social Sciences Journal

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the cost by excluding all activities that do not add value to the creation, and this leads to a shortening of its life cycle and therefore Produce a product at a low cost.

et al. Riccardo (2015) examined product life cycle management, which needs industrial synergy across large-scale networks to collect, recycle, reuse and recover end-of-life products, and provide a tool for assessing the economic, environmental, and transport geographic conditions enabling the design of sustainable closed-loop networks for generic product management. It has become a necessity throughout its life cycle. The proposed tool is built using the Mixed Linear Programming (MILP) model to design a multi-level closed-loop network strategically. The product life cycle is handled across a chain through seven phases:

raw material suppliers, manufacturing plants, distribution centres, retailers, waste and by- product collection nodes, recycling centres, and landfills. The model reduces the cost-based and carbon-based functions to determine the optimal geolocation of network nodes and allocate transport flows.

According to the ordeal study (2020), it was concluded that the time-oriented product life cycle cost technology provides integrated and accurate information for the resources of each stage of the product life cycle, which contributes to improving the practical application of the target cost technology, as well as providing specialists in cost and administrative accounting with specialized knowledge. The in-depth study reflects the importance of this integration in managing and reducing costs. While this study found that the integration between the target cost technology and the time-oriented product life cycle cost contributes to cost management at the level of each stage of the product life cycle concerning the process of reduction or the process of making decisions about it. Intelligent manufacturing is flexible and autonomous to meet demands for mass product customization, and manufacturing can be improved by integrating physical production and digital realms to lower product costs.

2. Literature Review

2.1 Conceptual introduction to product life cycle balancing

The concept of product life cycle balancing means planning the entire life cycle of a product (design, manufacture, service, and disposal). Product life cycle budgeting has been defined as managers estimating revenue and costs across the entire product value chain from initial product research and development to customer service and support (Srikant & Rajan (2018).

Dixon (2015) pointed out that product life cycle budgeting is a primary system for planning and monitoring performance, which is designed to integrate tightly with the management information system for the use of budgets, where many plans express forecasts of the economic unit that span several years are evaluated and can be Comparing them with the actual figures, with the need to update the budget figures according to economic conditions.

Farlex (2012) sees it as an estimate of all expenses and revenues that the unit incurs and derives from the product. It includes all expenses from research and development, marketing, customer services, etc., as well as revenues from sales and other sources. It is calculated from the beginning of the product research to the estimated withdrawal date from the market.

We conclude from this that the product life cycle budget is the process of estimating and forecasting the product’s revenues and costs throughout its life stages, starting from putting forward its idea and planning for it until the time of its production, marketing and disposal, and comparing the actual achieved of these revenues and costs with what was planned in the budget in preparation for evaluating performance and correcting deviations, if any or Work to reduce and modify it in light of the current circumstances

Technium Social Sciences Journal Vol. 36, 42-60, October, 2022 ISSN: 2668-7798 www.techniumscience.com

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2.1.1. Product life cycle balancing goals

Product life cycle balancing aims to achieve the following objectives: (Srikant & Rajan, (2018) None & Kozhikode (2019); Kamthe & Verma, (2013).

1- Assist in providing helpful information for strategic evaluation of pricing decisions.

2- Helping to reduce the time to reach the market.

3- Helping to improve the quality of the product.

4- Helping reduce the costs of prototypes.

5- The ability to quickly identify potential sales and revenue.

6- Help highlight costs throughout the product life cycle, facilitating target pricing, target costing, and value engineering at the design stage before securing costs.

7- Assist in comparing actual costs with life cycle budgets to get feedback and know how to estimate costs for subsequent products better.

8- Assist in making or suggesting changes to the product if it is discovered that there are changes that require this in the features, performance, design and at each stage of the product life cycle

2.1.2.Elements of product life cycle budgeting

According to Fernande's (2021) study, the application of any technology depends on several ingredients for the completeness and success of the application process. The product life cycle balancing technology is based on the understanding and knowledge awareness of managers responsible for the preparation process for this technology to achieve the desired advantages and objectives. It provides a system To receive and evaluate new product ideas, features, or characteristics. Idea evaluation usually involves a combination of market and domain experience, customer insight, and a mechanism for evaluating the idea in the real world that would assist the individuals involved in preparing this budget in the product planning and design process. The presence of trained specialists with sufficient scientific and theoretical qualifications to prepare this budget is one of the essential ingredients. Mashkour & Abdel- Attar, (2016), Talib & Ismail (2018), and Al-Jumaili (2021) agree that one of the constituents is also controlling all stages of the product or service life cycle, in addition to the systematic sequence of procedures for preparing this technology.

2.1.3 Steps to prepare a product life cycle budget

Al-Mihna (2020) sees that the application of the product life cycle cost balancing technique is based on the basic concepts of the product life cycle cost technology, within the framework of an integrative relationship between them, where the product life cycle cost technology depends in its application on identifying groups of resources for each stage of the life cycle The product then determines and allocates the total cost to groups of resources utilizing resource guides, then determines the usable energy and the group of activities that each stage is a prelude to calculating the cost of each stage and as a result calculating the total cost of the total stages of the product life cycle. This process represents a flow of costs from the top and bottom, and Srikant & Rajan showed (2018), and Al-Daami (2021) that the application of product life cycle budgeting includes the following steps:

1- Forecasting (the quantity and value) the expected demand for the coming period.

2- Determining the cost rates for the activities of each stage of the product life cycle.

3- Determining the needs and requirements of the activities of each stage of the product life cycle necessary to meet the expected demand.

4- Determine the consumption rates for each resource.

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5- Determining the number of resources required to meet the expected demand.

6- Calculating the cost of the necessary resources.

7- Aggregate the total cost of resources in order to meet the expected demand.

2.1.4. Difficulties of implementing product life cycle balancing

According to Luay &. Ali (2018) The application of any administrative technology, especially if it is a newly used technology on a practical level, faces many difficulties, and the following are the most prominent difficulties related to the application of this technology:-

1- Poor or weak perception of the benefits of life cycle budgeting by those concerned in economic units in preparing budgets, and they are satisfied with preparing budgets using traditional methods.

2- Lack of reliable input data related to product life cycle costs.

3- Lack of information regarding the required actual cost variables and the performance information needed for cost planning and comparisons, mainly if the analysis is conducted to develop life cycle budgets.

4- Uncertainty and awareness related to the assumptions of the product life cycle concept, which is the basis for preparing the product life cycle budget.

5- Incomplete understanding of the product life cycle methodology and the associated costs and how to apply it to the preparation of budgets. This is a significant barrier to the wide application of product life cycle balancing technology.

2.1.5 Product Life Cycle Balancing Using TD – PLCB

Based on what was mentioned previously, the time-oriented product life-cycle costing technology is the basis for implementing product life-cycle budgeting TD - PLCB. Strategic cost management is used in estimating the revenue and cost of the product for all stages of its life and using time equations. And this leads to the estimation of resources and the accurate allocation of resource costs for each stage of the product’s life, based on the amount of expected and predicted demand and in a way that helps the management of the economic unit to work To make comparisons and objective analysis of costs and revenues, as well as to evaluate performance, detect deviations, if any, correct them and work to avoid them in the future in order to achieve competitive advantages that enable the economic unit to achieve customer satisfaction and build its market share in the long term.

Based on what was mentioned previously, the time-oriented product life-cycle costing technology is the basis for implementing product life-cycle budgeting (time-oriented TD - PLCB). Strategic cost management is used in the process of estimating the revenue and cost of the product and for all stages of its life and using time equations, and this leads to the estimation of resources and the accurate allocation of resource costs for each stage of the product's life, based on the amount of expected and predicted demand and in a way that helps the management of the economic unit to work To make comparisons and objective analysis of costs and revenues, as well as to evaluate performance, detect deviations, if any, correct them and work to avoid them in the future in order to achieve competitive advantages that enable the economic unit to achieve customer satisfaction and build its market share in the long term.

Adigüzel (2008), Dejnega (2011), Srikant & Rajan (2018), Blocher (2019), and Dilemma (2020) on the steps for implementing the product life cycle balancing technique on whether the time is adopted as a primary cost vector about cycle balancing, The time-oriented life of the product is represented by the following: -

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1. Preparing forecasts and quantitative estimates of sales for the upcoming period based on current sales levels and sales trends in the past years, pricing policies, as well as the selling price, which is determined based on the profit margin that is added to the total cost of one unit of product, as well as determining the estimated production quantities ( planned) for the coming period, based on which (the amount of sales and production) is expected for the amounts of cost vectors (time), which belong to products or services.

2. Determining the different resource groups (sections and divisions) that are related to the life cycle stages of the product, including those stages of activities that consume those resources.

3. Determining forecasts and estimates of the total cost of resource groups for each stage of the life cycle of the product, which are the direct and indirect costs that correspond to the performance of the activities carried out by all individuals who participate in the production of the product or the provision of the service.

4. Determining all the energy requirements of the different resources (usable energy) for the coming period, as studies and scientific and applied research in this regard indicate that the approved percentage of theoretical energy is (80%) of the theoretical energy, in order to take into account the cases of interruptions and interruptions Which is expected to happen as a result of (maintenance or repair) and others.

5. Determine the planned energy cost rates (unit time cost) for each resource group (department or division) and each stage of the life cycle by dividing the total cost and each of the resource groups calculated in (Step 3) by the process energy (resource energy) for each resource group calculated in (step 4).

6. Determining the expected amounts of time vectors related to the completed activities leading to each stage of the life cycle of the product and their events, which are adopted as a basis for preparing (time equations) in light of each amount for each stage, and as a result, calculating the (planned) operating cost for those stages, and what it should be noted The reference here is that the time equations for the budget period can be modified and changed if there are improvements in the various processes that would contribute to reducing the time required to perform those activities that include the production stages, or if there are new and updated activities that are added to the operations.

7. Calculation of the total (planned) operating cost of the resource groups required for each stage of the life cycle of the product by multiplying the (planned) cost per unit time (minute) and for each resource group calculated in (step 5) at the time of the event for each activity and calculated by (Step 6) for each stage.

8. Calculate the total (planned) cost of products or services for each stage of the product's life cycle by combining the cost of materials and direct wages with the indirect cost assigned to the stages to extract the total planned manufacturing cost of the product.

According to Adigüzel (2008), Al-Dami (2021), and Bragg (2022), product life cycle balancing if time is adopted when applied is achieved at a practical level facilitating the comparison of costs or profits of products of different ranges and lengths using cost-benefit data for the entire life of any project cycle Or a product, it also allows a better understanding of the total costs, as it helps to prepare budgets inexpensively and quickly.

2.2. Reducing costs with product lifecycle balancing

Reducing costs is one of the strategic objectives of managing the economic unit through which it maintains its market position while ensuring the continuity of the economic unit in the market in the event of solid competition. The product represents a modern method to reduce the Technium Social Sciences Journal

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cost of the product during its life cycle, considering that the cost is an essential thing that aims to reduce it, the economic unit. It is one of the requirements to carry out its activities, so the economic unit can not dispense with it except when production stops completely.’ At the same time, Khader (2013) pointed out that if the economic unit wants to support its competitive position in the market, it must strive to reach the lowest possible cost for its products. Rajkhan (2002) indicates that the process of cost reduction should be without cancelling or avoiding a characteristic or characteristic of the product as well as not creating Any adverse effects related to the quality of the product; that is, the reduction should be away from the issue of avoiding waste, waste and spoilage in production. Kuzu (2012) compared the traditional system with cost on a cycle basis. The product is shown in the table below.

Table 1: Conventional cost and cost based on product life cycle

No, Traditional cost The cost is based on the life cycle of the product

1 Treats product development costs and logistics costs as term costs.

It treats product development costs and logistics costs as product costs.

2 It only considers the cost related to production when calculating the cost of production.

It considers all costs associated with all phases of the product life cycle.

3 Its importance is to control the cost at the production stage only.

Its importance is represented in cost control from the stage of planning and designing the product until its disposal.

4 It depends on periodic reports. Depends on product lifecycle-related reports.

Sorour (2020) adds that cost reduction is in the product life-cycle approach through planning, designing and developing the product and reducing its life. Al-Shaabani (2010) believes that reducing the product life-cycle is one of the best practical ways to reduce costs, as the reasons for the decline of the product life-cycle are due For two main reasons:

1- Increasing the strength of competition with a permanent and continuous desire to gain competitive advantages.

2- The acceleration of technological innovations and the accompanying increase and diversification of customer requirements.

Based on the previous, the cost reduction process cannot be promised and hoped for success without being assigned, supported and planned by applying the product life cycle budget, as this budget is an essential and fundamental basis for the cost of all stages of the product. One of the factors to reduce cost and increase profits, especially if time is adopted as a guide Cost in its application. As a result, the process of planning and controlling the cost of production operations from research and development to the disposal stage represents the essential support for balancing the product life cycle and achieving its goals. However, this role may be in the form of a theoretical assumption that is difficult to predict and predict its results without doing an applied study. This is what will be dealt with in the next section.

3. Research Methodology

Most of the economic units (especially the research sample laboratory) suffer from an increase in the cost related to their products, which affected the increase in their prices compared to the prices of imported goods, which led to a decrease in demand for their products, which Technium Social Sciences Journal

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resulted in their inability to compete with imported products, or the threat to the research sample laboratory Exiting the competitive market, especially after the openness that Iraq witnessed after the events of 2003, in addition to the traditional cost accounting systems in economic units, especially the laboratory, the research sample, which focused on cost centres to determine the cost of production only, without paying attention to compiling the cost of activities related to all stages of the life cycle. The product, from the beginning of the idea of the product until its disposal, has affected the result in cost reduction for the laboratory sample of the research.

3.1. Research Importance

The need for economic units in general, and in particular the research sample laboratory, to apply modern technologies in the field of cost and administrative accounting, and the most prominent in this field is the technique of balancing the product life cycle in a way that helps reduce costs in the laboratory, the research sample, and its role in helping economic units To keep abreast of developments and face the changes witnessed by the contemporary business environment, in a way that leads to the development of systems concerned with preparing budgets to provide appropriate information that contributes to achieving success in terms of planning profits, costs and revenues with optimal use of resources.

3.2 Problem of the Research

Based on the previous, the research problem can be formulated in the following questions:

1- Does the application of product life cycle budgeting help overcome the problems faced by traditional cost and management accounting systems?

2- Is it possible to apply product life cycle budgeting in the laboratory of the research sample?

3- Does applying product life cycle budgeting reduce costs in the laboratory and the research sample?

3.4 Research Aims

Based on the questions presented in this research, the hypothesis that the researchers are trying to prove or deny is summarized as follows: "The use of product life cycle budgeting contributes to reducing costs in the laboratory, the research sample, without affecting the quality of the product."

4. Reducing costs with product life cycle balancing technology in the air-cooled motor production plant

The General Company for Electrical and Electronic Industries is one of the companies affiliated with the Ministry of Industry and Minerals, which was established in (1965) as a result of the cooperation agreement between the Soviet Union and Iraq, where it began its experimental work in (1967) as one of the economic institutions of the Iraqi Ministry of Industry and Minerals.

4.1. About the Air-Cooled Engine Plant (Research Sample)

Experimental production began in this plant at the beginning of the year (1986), and the plant continued to produce four types of engines according to the surplus size for export purposes. Despite the continuous production operations in the factory (the research sample), its products have witnessed a significant decrease in their production levels, so that they have Technium Social Sciences Journal

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become much less than the designed, available and planned levels of energy, which led to the suspension of production of many products for varying periods, i.e. That its production has become irregular, and according to demand, and this is due to the impact of the events (2003) that the country went through, which led to the country's openness to the world, which led to a decrease in demand for the factory's products locally due to the entry of competing products, at lower prices than the local product, And the failure to activate the necessary and vital laws to protect the consumer, and the customs tariff, etc. Moreover, all this caused a significant decline in the result of the factory's activity, as well as the case of all factories and factories of the other company, so there may come a time when production stops due to its economic feasibility from the point of view of the management of the General Company for Electrical and Electronic Industries.

Table 2: Percentages of realization of available energy for the years 2014-2018 (measurement unit/number)

percentage achieved to

% Actual output Planned

output Available

energy Design

energy Year

Planned output Available

energy Design

energy

11.76%

1.7%

0.648%

680 5780

40000 105000

2014

9.92%

1.475%

0.56%

590 5950

40000 105000

2015

10.18%

1.425%

0.54%

570 5600

40000 105000

2016

9.94%

1.363%

0.52%

545 5481

40000 105000

2017

0.841%

0.125%

0.048%

50 5945

40000 105000

2018

It is noted from the above table that the actual production volume of engines (for the research sample laboratory) has decreased significantly compared to the levels of (designed, available, and planned energy, especially in 2018)), in which the actual production decreased significantly, and this is due to the continuous changes that occurred Speak up to date in a competitive business environment.

4.2 Reality of the cost and pricing system

After the researcher was briefed on the reality of the accounting system applied in the laboratory sample of the research, it was found that there is a cost system that depends on the unified accounting system. The technological path of the product (refrigerated engine) in terms of quantities and types of materials needed for the production process and working times, and then the total cost of the product is determined, according to the cost elements related to the product, which the cost system provides, as the cost components (of the refrigerated engine) include direct materials Its prices are determined by the Stores Accounts Division, by adopting the weighted average method. The share of the (cooled motor) from the cost of the work is determined by dividing the workers' salaries by the number of motors produced. The number of workers) in the laboratory is the research sample. The marketing and administrative costs are distributed based on the ratio of each to the total production cost. In the second stage, the initial selling price of the engine is determined after adding the profit margin to the total cost of one engine at a rate ranging between (10% and 15%). The board of directors determines it, and then the initial selling price is sent to the marketing department to study its compatibility with the reality of the market and proposals to increase or decrease it. In the third stage, the board of Technium Social Sciences Journal

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directors approves the sale price after studying the marketing department's proposals, to be approved. The table shows the cost of one engine (air-cooled engine, 1/4 hp) And the selling price for the year (2018).

Table 3: The cost and selling price of the cooled engine (1/4 HP) for the plant for the year 2018

The details Single engine

cost The primary materials used in the manufacture of the engine 34500.427

chemicals 2502.697

Materials purchased from local markets 861.000

Insulating materials and bonds 386.0428

Total cost (initial materials) 38250.167

labour cost 12595

extinction 810

Another fixed cost 326

Total fixed cost 13731

Manufacture cost 51981.167

Marketing costs 8% 4158.4934

Administrative cost 5% 2599.0584

total cost 58738.7197

Profit Margin (10%) 5873.87

Selling price for cryogenic engine 64612.5897

The primary materials used in the manufacture of the engine 34500.427

Based on the foregoing, it is clear that there is a cost system in the laboratory that has some of the components of the cost system, but it is not reliable in terms of reducing costs for the company’s products, in addition to the lack of information that helps in making various decisions, and that there are no features related to the application of The technology of balancing the product life cycle using the time vector, and therefore it may be necessary to apply the above technology in this laboratory, in a way that leads to reducing cost and maintaining product quality, as the application of the above technology in the laboratory, the research sample, and in light of the above-mentioned criticisms and observations, represents From the point of view of the researchers, it is a necessity to face the changes and developments taking place in the contemporary business environment, and this is what will be addressed in the next topic.

4.3. Application of product life cycle balancing technology in the laboratory After identifying the cost system applied in the laboratory and addressing the criticisms and observations recorded on it, as well as the absence of any features for the application of modern strategic techniques for management accounting and cost accounting, including the product life cycle balancing technique, and the role of this technology in reducing costs for the company in general and the laboratory (Research sample) in particular so that this topic will shed light on the steps related to the application of the above technology and as shown below with the use of time as an essential cost guide in its application to the product of the air-cooled Technium Social Sciences Journal

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engine with a capacity of 1/4 hp, as well as based on the technology of Time-oriented product life-cycle costing in the preparation of the product life-cycle balancing technique.

4.3.1, Estimate the number of sales and production for the next period

In this step, the quantity of sales and production that is expected to be achieved for a 1/4 hp air-cooled engine product for the upcoming period (2019) is estimated. Furthermore, sales, as well as access to market research, which was conducted by the plant, since what is expected to be produced for the coming period if modern cost and management techniques are applied, including the product life cycle balancing technique, is up to (7000 units of the horsepower as mentioned earlier cooled engine product). The male, which is equivalent to the amount of the planned quantity that the laboratory aspires to produce the research sample, as the application of the above technique will help the research sample laboratory in achieving the dimensions of competitive advantage related to the product of the refrigerated engine in terms of reducing time and cost, and thus achieving an increase in manufacturing flexibility and quality, and this will be reflected; as a result, the selling price will decrease, and sales will increase, in a way that makes the factory occupies an excellent competitive position in terms of similar refrigerated engines in the market, which is considered competition for the factory’s product. For a research sample. Estimate the number of sales and production for the next period.

4.3.2. Define groups and resources related to the lifecycle stages of a product.

In this step, the various groups of resources related to the life cycle stages of the (air- cooled engine with a capacity of 1/4 hp) are represented in all the departments and divisions concerned with the production of the above engine identified.

4.3.3. Determine the total planned cost of resource groups and all phases of the product lifecycle.

The total cost of all resource groups (departments and divisions) and for each life cycle stage associated with the production process of the 1/4-capacity air-cooled engine in the laboratory, the research sample, is represented by both the direct cost elements and the indirect cost elements, which correspond to the performance of the activities in each A stage of engine production, which is implemented by all (individuals) who participate in the production process of the (cooled engine) and each resource group. Direct, which is reflected in the reality of the cost system applied in the laboratory, the research sample, except for direct materials and direct work, as shown in tables (4) and (5).

4.3.4. Determine the operational capacity of all resource groups.

In this step, all the energy requirements of the various resources are determined for the coming period, which is represented in the hours of work, or the time required to complete and complete each stage of the life cycle in which the product passes, which will be relied upon in setting the planned energy cost rates (in the fifth step). Suffix). Scientific and applied research in this regard indicates that the percentage of approved energy as usable energy is (80%) of the theoretical energy, in terms of taking into account the cases of interruptions and interruptions that may occur as a result of (maintenance or repair) and others, taking into account and based on the results of interviews with engineers In the lab, and that the lab did not reach this percentage in its activity. However, this percentage represents part of the laboratory procedures, the research sample to transform what is an object into what the lab should be on, and thus it represents a reference to the capacity and ability of the lab to reach the ratio mentioned above Technium Social Sciences Journal

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if The practical application of modern techniques of cost and management accounting that would contribute to achieving the dimensions of competitive advantage by relying on practical energy without theory.

4.3.5. Determine the planned energy cost rates (unit time cost) for each resource group

In this step, the planned cost per unit time (energy) is calculated for each stage of the life cycle of the air-cooled engine with a capacity of 1/4 hp in the laboratory, the research sample, as shown in Tables (4), (5), by dividing the total direct cost The indirect and corresponding to the implementation and completion of the activities that are practised by the persons who participate in the production processes of the product (cooled engine 1/4 hp), on the usable energy (calculated in the fourth step), represented by the necessary working hours, to complete and complete each stage of the cycle The life of a product (refrigerated engine), which is accomplished by each (section, or division), whether it is related to production centres, or service centres, and administration, which is as follows:

1- Determination of the planned energy cost rate for the relevant stages of cryogenic engine production

Table (5) shows the results for calculating the planned unit time cost, i.e. (the average energy cost) per minute for the stages associated with the production of the cooled engine, which are under the production centres in the laboratory, the research sample.

Table 4: Planned unit time cost related to life cycle phases of a 1/4 hp engine coolant for 2019

Stage The annual

direct cost for stage

administrator

Cost per minute

The annual direct cost to the worker

Cost per minute

Annual indirect cost

Cost per minute

Planning and design phase (18 workers)

15150000 170.793 9103000 102.622 101839628 63.782 Production

stage

Stator Division

(40 workers) 15950200 179.814 7813040 88.080 145131140 40.903 Rotary

Division (17 workers)

11480000 129.419 7510800 84.673 127274536 84.401 Front and Back

Covers Division )21 workers (

15500440 174.743 7611400 85.807 110237931 59.179 Keyboard

Division )6 workers (

14001000 157.840 7999400 90.181 84793024 159.318 Technium Social Sciences Journal

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Assembly division (14 workers)

14634400 164.980 7225000 81.451 118700233 95.583 Marketing

stage

(13 workers)

13570372 152.985 9440576 106.428 67836419 58.827 It can be noted from the above Table that the cost per minute has been calculated by dividing the annual direct cost of the stage official or worker, which the department or division undertakes to implement, or indirect, by the practical energy, which in turn is calculated as follows:

❖ As for the direct cost (for the stage official or one worker:

= (22 working days per month and after excluding holidays x 7 working hours per day in the factory x 60 minutes / hour) x 80% x 12 months per year = 88,704 minutes

❖ As for the indirect cost process energy, it is calculated as follows:

Practical energy = 22 days per month x 7 hours of work per day x number of workers for the stage x 60 minutes/hour) x 12 months per year x 80%

The following illustration shows the calculation process for the planned (one minute) cost shown in Table (5) for the planning and design phase:

❖ Planned (one-minute) cost of the stage administrator = annual (planned) direct cost of the stage official ÷ annual operational capacity

15,150,000 = dinars ÷ 88704 minutes = 170,793 dinars/minute

❖ Planned (per minute) cost per worker = Annual (planned) direct cost per worker ÷ annual operational capacity

= 9,103,000 dinars ÷ 88704 minutes = 102.622 dinars / minute Indirect cost per unit time (one minute)

= annual (planned) indirect cost ÷ annual operational capacity

= 101839628 dinars ÷ 1596672 minutes = 63,782 dinars/minute

2- Determining the planned unit time (energy) cost rate related to service and administrative cost centres:

Table (5) shows the results of the planned unit time cost calculation process (per minute) related to service and administrative cost centres.

Table 5: Planned unit time cost related to service and administrative cost centres for the year 2019

Cost centres Total cost (1)

Annual working hours (2)

Annual minutes (3) (2) x 60 minutes

Practical Energy 80%

(4)

(3) x 80%

Cost per minute (5) (1÷4) Technical

Affairs (34) worker

273544205 65680 3940800 3152640 86.767

Maintenance

(16 ) worker 104600225 28721 1723260 1378608 75.874 lab

management 131402860 35965 2157900 1726320 76.117

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(19) worker quality control (14) worker

98312000 25022 1501320 1201056 81.855

Stores

(13) worker 90710920 21175 1270500 1016400 89.247

Transport

(11) worker 76926066 19480 1168800 935040 82.270

4.3.6. Define and group activities related to the life cycle phases of a 1/4 HP air- cooled engine and the planned event time for each activity.

Based on the field visits and cohabitation carried out by the researcher in the laboratory of the research sample, by studying the reality of the production of the cryogenic engine product. In the interviews conducted with some engineers working in the laboratory, the activities related to the life cycle stages of this product were identified, as well as determining the time of events. These activities, as well as the party responsible for each of the events required by production operations to reach the production level (planned) of cooled engines for the year (2019), and trying to collect them in Cost Pools, which shows the activities for each stage of the life cycle of a cooled engine product air, and the time of each activity in each cycle.

It is worth noting that by determining the amount of time required for the so-called (time vectors), it is possible to prepare (time equations) in light of each amount, and for all activities involved for each stage of the coolant engine product life cycle, in preparation for calculating the operating cost ( Planned) for those stages, as it was clarified in the theoretical side of the research, where the time equation for the planning and design stage activities for the air-cooled engine product can be formulated in preparation for calculating the (planned) operating cost for it, as follows:

Equation of planned time for the planning and design phase:

Planned time (in minutes) for the planning and design phase = 1.1 (production order issuance + work order preparation) + 2.9 (receipt of work order, material order + product planning and design) + 0.5 (document signature) + 1.3 (receipt of raw materials + preliminary inspection and testing (1.4) Transporting the raw materials + sending the execution order to the production stage (+ 0.4) the final inspection and testing.

In the same way, the time equations for the rest of the production stages of the air-cooled engine are prepared.

4.3.7. Calculate the planned operating cost for each stage

In this step, the planned unit time cost (in minutes) is multiplied for each of the resource groups (calculated in the fifth paragraph, points (1) and (2)) at the time of the activity event and for each stage (which was calculated in the sixth paragraph by applying time equations) In order to determine the total (planned) cost of the required resource groups that represent the planned operating cost (labour + TPM), and for each stage of the cryogenic engine product life cycle.

As an example of the calculation method, Table (6) shows the planned operating cost for the planning and design phase.

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Table 6: Planned operating cost related to the planning and design phase for 2019

Activity (1) Event time

for activity (minutes)(2)

unit time cost (d/min) (3)

Planned

Operating Cost (4) 3

× 2 Production order issuance and

work order preparation

1.1 86.767 95.4437

Receipt of work order, requisition of materials and product planning and design

2.9 234.575 680.2675

Document signature 0.5 89.247 44.6235

Receipt of raw materials and inspection and preliminary testing

1.3 166.404 216.3252

Transfer of raw materials and sending the execution order to the production stage

1.4 82.270 115.178

Examination and final exam 0.4 81.855 32.742

Total 1184.5799

In the same way, the planned operating cost is calculated for the rest of the life cycle of the cryogenic engine, as shown in Table (7).

Table 7: The planned operating cost for the remainder of the cryogenic engine life cycle for 2019

Stage Planned operating cost

Production stage:

Stator Division 1558.4652

Rotary Division 2154.247

Front and Back Covers Division 1564.0601

Keyboard Division 1110.6974

Assembly Division 1407.9811

Marketing stage 391.0662

After-sales service stage 944.2501

4.3.8. Calculation of the planned total cost of the cryogenic engine product

After calculating the planned operating cost for the relevant stages of the cryogenic engine product life cycle, the total planned cost for each stage of the cryogenic engine product life cycle is .determined by adding the planned cost from the material component involved in each stage of the cryogenic engine life cycle to the planned operating cost To extract the planned manufacturing cost, adding the share of each stage of the marketing and administrative cost, to get the planned cost of the cryogenic engine product.

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Table 8: Planned total cost related to the life cycle phases of a plant air-cooled engine product 2019 research sample.

Stage Material cost (1)

Indirect planned operating cost (2)

Planned Manufacture Cost (3) (1 + 2)

Administrative Cost (4)

(5 % x 3)

Planned total cost (5)

(3+4) Planning and

design stage 1941.196 1184.5799 3125.7759 156.2888 3282.0647 production

stage:

Stator

Division 11647.1759 1558.4652 13205.6411 660.2821 13865.9232 Rotary

Division 9317.743 2154.247 11471.99 573.5995 12045.5895

Front and Back Covers Division

6988.3055 1564.0601 8552.3656 427.6183 8979.9839 Keyboard

Division 388.2392 1110.6974 1498.9366 74.9468 1573.8834 Assembly

Division 4270.6311 1407.9811 5678.6122 283.9306 5962.5428 Marketing

stage: 1552.9568 391.0662 1944.023 97.2011 2041.2241

After-sales

service stage: 2717.672 944.2501 3661.9221 183.0961 3845.0182 Total 38823.9195 10315.347 49139.2665 2456.9633 51596.2298

The research sample clearly shows the role of the product life cycle balancing technique in reducing the costs of laboratory products. In the application process, while the reality of the cost system applied in the laboratory, the research sample shows that the cost of one refrigerated engine is (58738.7197) dinars. Accordingly, this has reduced the cost of one engine by (7142.4899) dinars. Despite the expectations of engineers In the laboratory, there was an increase in the prices of raw materials by 1.5% while maintaining the quality of the product.

Thus, the research hypothesis was proven that “the use of the product life cycle budget contributes to reducing costs in the laboratory, the research sample without affecting the quality of the product”, as well as On the other hand, the results reached as a result of applying the product life cycle balancing technique based on the time-oriented product life cycle costing technique confirm the correctness of the smooth flow of the steps of applying the role balancing technique. Product life and proves the research hypothesis.

5. Conclusion

Through what was presented on the practical side, the weakness of traditional cost systems was observed in fulfilling the requirements and objectives of management in the laboratory, the research sample, due to its inability to provide accurate data that could help the administration in taking appropriate and appropriate decisions in light of the rapid developments Technium Social Sciences Journal

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and changes of the contemporary business environment, including the forces of intense competition. , and this calls for the emergence of modern cost and administrative techniques that can keep pace with these developments and changes, including the technology of balancing the product life cycle that has been applied, and that calculating the cost of the product or service was inappropriate in determining the product price for factory products because there are some shortcomings in it, because it does not take Taking into account the cost that occurs before and after production or service, as the reality of pricing for factory products indicates that there is no specific and known policy that can be followed in this regard, as the factory relies on the traditional approach to pricing, which is (cost + profit margin), forgetting or ignoring the prices Selling to competing products whose selling price levels are lower than the selling price level for its products in general, and the refrigerated engine product in particular. This results in the unwillingness of customers to buy and sell the factory's products and their reluctance to do so.

It has been noted that there is no clear role for the research and development department in the factory to follow up on the rapid developments and changes taking place in the contemporary work environment, which necessitates that the customer is the guide for economic units as they seek to meet his needs and requirements. Moreover, respond to his desires.

Defining, compiling and displaying the cost elements in the laboratory is not done according to the proper scientific method when preparing cost lists, as well as not classifying the cost in a way that helps in the decision-making process. The intense and intense competition conditions surrounding the laboratory at present, and this is all due to the lack of suitability of the qualifications of individuals working in the cost system management to the accounting speciality, and the focus of the product life cycle balancing technique on the number of resources that contribute to the production of a product (cooled engine) and in each stage of its life cycle, by adopting a basis (time) as an essential cost vector in Its application, making it one of the modern cost and management techniques in the field of accounting, which is characterized by accuracy in calculating the cost and managing it efficiently.

The practical application of the product life cycle balancing technology proved the possibility of reducing the cost of the stages that the product (cooled engine) goes through for the laboratory; the research sample during its life cycle amounted to (7142.4899) dinars. Sales, and consequently the low level of its production, was represented by a rise in its prices compared to comparable and competing products, especially products of Turkish, Chinese and Iranian origin. Therefore, the application of modern technologies, including the technology under the current study represented by PLCB) will improve the product's value and reduce its cost compared to competing products, which are very popular to buy. Thus, increasing its produced quantities to reach the planned production the plant aspires to achieve.

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