Ismail y. Al. The Role of Modern Management Accounting Techniques in Reducing Costs and Enhancing Competitive the Advantage

Abstract

Traditional Management Accounting Practices (MAPs) have ceased to be of significant
importance with regard to their ability to cope with the economic growth of various
corporations. Furthermore, the roles of MAPs have proven to be of limited ability to minimise
monetary extravagance. Therefore, it is due to the aforementioned reasons in addition to the
requirements of the market and corporations’ competitions, several approaches have been
emerged in order to eliminate monetary extravagance through the effective control of the
activities of the organisation and what is related to the disbursements that contribute in
reducing the misuse of available financial resources, which in turn will contribute to the goal
of any enterprise is to gain profits. Such approaches include: (Activity-Based Budgeting)
(ABB(, Activity-Based Management (ABM), and the Value Chain approach (VCH).
These approaches, however, have mainly focused on the activities of the organisation,
particularly indirect costs that have become very important in terms of high costs due to
technological development and the use of modern technologies as these approaches seek to
use these costs economically.
The ABM approach depends mainly on the output of the cost system on the basis of activities,
i.e., the cost of activities is calculated more accurately than the traditional methods of
calculating production costs. This will enhance the role of management on the basis of
activities by identifying activities that add value and activities that do not add value and
inform the management through reports on these activities that should be paid attention,
especially adding value and excluding activities that do not add value and dispose the cost.
This study will depend on the measurement of the effect of applying modern accounting
approaches and methods such as Activity-Based Budgeting) ABB (, Activity-Based
Management (ABM), and the Value Chain approach. This will be achieved by relying on a
questionnaire to be distributed to the financial managers and accountants who are related to
the study subject in a group of Jordanian pharmaceutical companies and beauty companies.
The method of analysis of variance will be used to test and construct a multi regression model
to measure the effect of the independent variables (represented by the application of modern
costing systems) on the dependent variable (namely reducing the cases of financial waste and
contributing to reducing the cost of production), due to their importance in enhancing the
competitiveness of the organization.