American Journal of Business Management, Economics and Banking ISSN (E): 2832-8078 Volume 18, | November, 2023 P a g e | 81 www.americanjournal.org EVALUATING RESPONSIBILITY ACCOUNTING EFFECTIVENESS UNDER RESOURCE CONSUMPTION ACCOUNTING METHOD-A CASE STUDY IN THE STATE COMPANY FOR THE PHARMACEUTICAL INDUSTRY AND MEDICAL APPLIANCES / SAMARRA Yaseen Abbas Dawood Researcher: Tikrit University College of Administration and Economics yaseeniraq1996@gmail.com Asst. Prof. Dr. Laith Noman Hassoon Tikrit University College of Administration and Economic Layth522@tu.edu.iq A B S T R A C T K E Y W O R D S The search aimed to identify the possibility of using the method of resource consumption accounting as one of the modern methods in allocating costs and measuring variances and the impact of these variances on the effectiveness of responsibility accounting in industrial companies through its production of appropriate information, The search dealt with the theoretical framework for resource consumption accounting method, the theoretical framework for the responsibility accounting system, In order to achieve the objective of the search and test its hypothesis, the General Company for the manufacture of medicines and medical supplies in Samarra was chosen as the subject of the study, The application of the resource consumption accounting method was tested on the company's data according to a case study in order to identify the contribution of the information resulting from this method to the effectiveness of responsibility accounting for the company under study, The search concluded that the resource consumption accounting method is one of the important methods for managing costs as a result of its ability to provide information to measure and identify. Variances, Resource Consumption Accounting method, Responsibility Accounting American Journal of Business Management, Economics and Banking Volume 18 Nov., 2023 P a g e | 82 www.americanjournal.org INTRODUCTION Companies in the modern industrial environment face a range of challenges as a result of severe competition pressures and decision makers at all levels of management need appropriate, acceptable and timely information to reduce costs and therefore the existence of deviations in the company is unacceptable, Companies need appropriate information. This information requires careful cost measurement. and deviations represent the difference between actual results and results included in the planning budgets (Bhimani et al., 2015: 444), measuring deviations requires modern cost systems that accurately allocate costs. Traditional cost systems suffer from deficiencies in their inability to provide accurate information reflecting the real deviations of the company's resources, as well as inefficiencies and indicators in judging resource utilization performance and providing them with relevant information for decision-making (Mahmoud, 2017:2). There was therefore an urgent need to adopt modern management and accounting approaches and techniques to keep abreast of these developments in order to enable companies to achieve their objectives, including accounting for resource consumption, as it is one of the entry points for strategic cost management that contributes to the achievement of two corporate objectives which helps it to formulate its decisions precisely and competitively, First, to contribute actively to the provision of accurate information on resources and related costs, as well as to the provision of precise foundations for the allocation of indirect costs that contribute to the allocation's objectivity, Second, contributing to cost reduction by identifying and measuring inactive energy and associated costs as well as removing non-value-added activities under resources and activities (Malik and others, 2019:171), Several studies (Mahmoud, 2017) (Okoye, 2009) (Obeid, 2021) have been interested in testing the possibility of harnessing the method of accounting for material consumption in determining cost deviations that can provide a basis for performance evaluation within the company's responsibility accounting system. Given the importance of the responsibility accounting system, the importance of its centers for cost control and its contribution to the provision of accounting information in the form of performance reports that oversee the work of section officials and assess their performance within the framework of the responsibility assigned to them by senior management, the method of accounting for resource consumption can be used to operationalize accountability decisions. The importance of research therefore comes from the importance and novelty of resource consumption accounting and its role in providing information to measure deviations and the impact of such deviations on the effectiveness of accountability accounting through the method's ability to provide more accurate cost and operational information on the allocation of available resources. This research aims at achieving a major objective, namely, to ensure that the method of accounting for resource consumption can be used as an input into the provision of information to measure deviations and the impact of such deviations on the effectiveness of corporate accountability, and to test this possibility if it is applied in Iraq's environment. While the limits of research are limited to the role of resource consumption accounting in accounting for responsibility by measuring deviations of the company in question, the limits of spatial research are limited to the General Company for Pharmaceutical and Medical Supplies in Samarra and for the period of time (2018). American Journal of Business Management, Economics and Banking Volume 18 Nov., 2023 P a g e | 83 www.americanjournal.org 2. Conceptual framework for accounting for resource consumption and accountability 2. 1. The formation and concept of accounting for resource consumption In Europe, the German Cost Accounting System (GPK), which was constantly developed to access a cost system, contributed to the process of allocating indirect costs more accurately. This system is based on the division of the company into a group of production and service resource pools as well as the classification of costs into fixed and proportionate costs and costs that form the basis of control and are allocated on the basis of the nature of each pool's outputs, The German cost system was a rapid response to weaknesses and difficulties around the activity-based cost system (ABC), an attempt to provide accurate information on the cost of expendable resources with the possibility of identifying idle energy, and both systems provide information that is better suited than traditional accounting systems (Okutmus, 2015: 47-48). As attempts continue to develop cost accounting systems and attempt to take advantage of the advantages of both ABC and GPK, a new concept was introduced in 2000, the Resource Consumption Accounting System is defined as an attempt to integrate information generated on expendable resources with activities under an integrated and comprehensive technology that provides cost responses under the cause-effect relationship and provides detailed and accurate information for decision-making (Malik, 2019:173). The definitions for accounting for resource consumption included the following: It is a resource-oriented input for cost allocation aimed at improving the activity-based cost system to enhance the cost management of the strategic system using resources as a key objective that enables the measurement of inactive resources to improve the accuracy of cost allocation and provides information on management's responsibility for evaluating performance, This helps in decision-making and enhances competitive advantage in the sense that it focuses on the decision-making perspective s competitive position (Wang, 2017:408 & Liu), Defined as a management accounting system, which classifies costs as fixed and variable and supports management decision-making with real cost data by identifying idle energy (Okutmus, 2015:46), as well as defined by Al-Naimi as a cost management portal aimed at optimizing the utilization of the company's resources, by applying the principle of causation in the allocation of expendable resources to cost targets (Products) By focusing on resources as the starting point for all operations and the cause of costs, to provide appropriate information on how to optimize the utilization of available resources, employ inactive energy which contributes to increased productivity, lower product cost and support competitive position (Al-Naimi, 2021:75). The researchers see a forward-looking entry focused on achieving the best cost allocation through in- kind flow of resources based on quantities and based on the requirements of cost measurement subjects and in accordance with the client's resource wishes and managing resource planning and managing inactive energy by taking into account the interrelationships between resources and each other in preparation for the accountability of those responsible, Better information to assist management in decision-making with a view to rationalizing resource management while reducing resources that do not add value as well as increasing revenues to maximize profitability and support the company's competitive position. American Journal of Business Management, Economics and Banking Volume 18 Nov., 2023 P a g e | 84 www.americanjournal.org 2. 2. Resource Consumption Accounting: Resource Consumption Accounting is based on three main components (Shaswar and Mustafa, 2022:325): a. Resources: RCA focuses primarily on resources from a holistic perspective and provides clear insights for managers on the energy used and the efficiency of its use And according to that pillar, resources are classified within the resource pools, to rely on the idea that resource pools should include the costs associated with each type of resource and each center’s resources must be uniform and under the responsibility of only one director, By pooling resources around a simplified output scale, cost centers have become easier to manage. b. Nature of cost: RCA is based on the fact that the underlying cause of cost occurrence is resource consumption through resource depletion and cost behavior pattern and the input distinguishes between two key cost dimensions, the first being the initial nature of the cost, whether fixed or variable costs, The second is the potential nature of variable costs, which explains the likelihood of a relative change in costs at the point of consumption. Therefore, the method of allocating costs must be linked to resource consumption models, addressing the nature of variable costs, either variable costs or fixed costs. C. Using the cost model on a quantitative basis: The input (RCA) depends on measuring resource outputs in the form of quantitative units of direct working hours, number of machine turnover hours and other foundations. The planned and actual cost is allocated to different cost units on the basis of what consumed a quantity of these resources taking into account the causal relationships between actual resources. 2. 3. The importance of accounting for resource consumption: Accounting literature has set many objectives for the RCA input, the most important of which are: a. The method of accounting for resource consumption is a cost management accounting tool that aims to provide appropriate information on how to efficiently utilize available resources and employ surplus idle energy, thereby contributing to increased productivity and lower product cost, thereby increasing the company's profits and supporting its competitive position (Abbas, 2020:870). b. Provide control over the use of resources by tracking the quantities of resources used and not used and identifying inactive and continuously restricted capacities to optimize the utilization of the company's available resources (Abu Sha 'aisha, 423:2016). c. Resource consumption accounting highlights the potential of resources to create value added for the customer both through optimal utilization of the interchangeable and non-interchangeable relationships between resources and activities and between resources and each other (Alkayadi, 2019:864). d. Women's Study the impact of the nature of the cost on resource consumption according to two factors: the basic nature of the cost and the potential nature of the variable cost (Al-Hussein, 2016:27). e. Provide accurate and fair measures of performance by analyzing deviations and separating the amount of resources consumed from the corresponding value, thereby providing more credible and objective information in analyzing deviations which contributes to the effective application of the principles of accountability for all company functions (Al-Saied., 2019:28). American Journal of Business Management, Economics and Banking Volume 18 Nov., 2023 P a g e | 85 www.americanjournal.org In the view of the researchers, the main objective of the resource consumption accounting input is to optimize the utilization of the resources available to the company, whether human or material, and to strengthen the utilization of inactive energy in order to reduce the cost of products and thereby increase the company's profitability and competitiveness. 2. 4. The concept of accountability of responsibility: accountability of responsibility is a comprehensive operational system that links administrative management with the accounting system by dividing the project into centers of responsibility that help link performance to those responsible for such performance through an integrated reporting system that relies on the application of the principle of oversight with exception, thus assisting in the processes (planning, organization, oversight and evaluation of performance); Today's companies are characterized by complex organizational structures that are difficult to manage centrally "The responsibilities and delegation of authority for making and implementing all decisions relating to the management of financial resources have to be defined. Accordingly, each manager is given the powers and authorities to manage the activity and carry out the required efficiently and effectively. and at the same time responsible for its consequences (Adam, 2020:1), The definitions of accountability for responsibility have been varied, defined as a management control system based on the principles of delegation of responsibility and positioning The authority is delegated to the Centre of Responsibility and Accountability for the Centre's performance; Under which managers are given decision-making authority and responsibilities for each activity occurring in a particular area of the company sector activities (Fowzia, 2001:54), It defined it (earning) as a system that, in the light of the concept of decentralization, provides accounting information on managers' performance in the sections through performance reports based on comparison of actual performance with the scheme with a view to identifying deviations (preferred or not preferred) and linking them to the company's responsible persons, within the authority granted and within the cost and controlled income (earning, 2007:5). In the researchers' view, it is a management accounting method aimed primarily at strengthening performance control by linking the responsibility for expenditure and income to the different managerial levels of the organizational structure under the planning budget, Performance control reports can be issued in comparison with the blueprint for each center of responsibility for deviations ", which enables the timely and accurate identification of responsibility for deviations, accounting for responsibility is the basis for the success of the decentralized management system. 2. 5. The importance of accountability: The importance of accountability stems from the fact that it is part of the internal control system that serves the planning and control processes of the resources available to the company to achieve both efficiency and effectiveness. Moreover, it is a tool that evaluates the performance of the company's divisions (Al- Dalahama, 2008: 324), the importance of the system comes from the company's performance control processes, Through procedures whereby actual implementation is followed up under planned performance In the sense that censorship begins at the beginning of the actual implementation and continues with it for the purpose of detecting deviations, identifying the persons responsible for them, taking the necessary action to correct them in a timely manner and then identifying the reasons for their occurrence and reporting them to the different administrative levels to make appropriate decisions about them (Ahmed and Mansour, 2019:19). American Journal of Business Management, Economics and Banking Volume 18 Nov., 2023 P a g e | 86 www.americanjournal.org The two researchers consider the importance of the responsibility accounting system to be the primary management of oversight and therefore the essence of oversight to help it increase the effectiveness of oversight because it relies on the principle of dividing the company into parts to make oversight of these parts more objective, accurate and fair. 2. 6. Importance of cost system information in evaluating the performance of responsibility centers The importance of cost information lies in evaluating performance by measuring actual performance against planned performance and analyzing deviations. Measuring the actual performance of managers of responsibility centers requires the provision of actual data to be measured, the measurement process arises as activities start in the company, and all branches of accounting, including cost accounting, affect the actual measurement process. After the completion of the accounting system and the determination of actual performance, the actual performance is linked to the planned performance of the responsibility centers, Its costs, which have arisen and have been influenced by major decisions, are allocated to it in accordance with the control's cost, Each center shall have its own planned and actual cost and thus facilitates the process of measuring performance, and is summarized in the performance report, which shows amounts of planned and actual key financial results appropriate to the type of position of responsibility and thus reflects the merit of its manager's management (Amar, 2011:62), the deviation between actual and planned performance, which may or may not be preferred, is analyzed. In both cases, this is a deviation from the scheme. The occurrence of such deviations is due to two reasons (inaccuracy in planning rates and performance criteria, inefficiency in actual implementation) (Jawdah & Al-Soboa, 2009: 31-32). In the light of these deviations, the effectiveness of these centers is judged. In the view of the researchers, the method of accounting for resource consumption measures the cost objectively and realistically against other systems, and thus the performance of the company's cost positions is measured in the performance reports against actual costs. (measured by the method of accounting for resource consumption) with planned costs, this results in accurate detection of deviations, mainly in the decision-making process, which affect the judgement of the performance and effectiveness of the cost positions. 3. Applied aspect The applied aspect of the research is to conduct a case study on the General Company of Pharmaceutical and Medical Supplies in Samarra in order to test the search hypothesis through the application of the resource consumption accounting system in the company in question. The application of the resource consumption accounting system results in information that helps the company to activate responsibility accounting decisions by properly measuring costs The products of the eye drops department were selected from the company departments, 3. 1. Steps to Apply Resource Consumption Accounting in the Company Resource consumption accounting is applied according to the following steps: American Journal of Business Management, Economics and Banking Volume 18 Nov., 2023 P a g e | 87 www.americanjournal.org 1. Identification of available resources spent on products: First, the available resources disbursed on the products of the Eye Drops Section, which consists of 13 products, and table (1) shows the resources consumed during this period: Table 1 Costs incurred during the year (2018) on products Statement Prices /Dinar/ Raw materials and ores 378,498,056 Direct wages 258,674,050 Indirect salaries and wages 157,105,480 Extinction 30,854,427 Packaging Materials 11,915,736 Oils & Greases 12,225,000 Electricity 10,458,045 Fees 15,650,000 Workers' Equipment 2,930,240 Hospitality 43,140 Maintenance Services 7,436,401 Fuel and oil 17,360,732 Stationery 5,019,938 Standby Tools 4,474,339 Lease of fixed assets 5,890,900 Publicity and Advertising 8,057,421 Research & Consulting 3,340,000 Miscellaneous service expenses 1,199,497 Transport, dispatch and communication 3,290,860 Water 4,195,507 Marketing and selling expenses 15,625,535 Administrative expenses 17,197,880 Total 971,443,184 Source: Table of researchers' preparation based on data provided by the company The amounts disbursed in Table (1) were extracted through the company's records (Samarra Pharmaceutical Lab) for the year (2018) of the Eye Drops Department and represents a starting point in the cost system, and the company management seeks to optimize them in order to obtain the highest productivity. 2. Identification of resource pools: resource pools are identified through the pooling of homogeneous resources with similar features in special pools, as shown in table (2) below: Table 2 Inventory and identification of resources in appropriate complexes No Sources Groups Sources Cost 1 Direct Material Direct ores and materials 378,498,056 2 Direct Action Direct wages 258,674,050 3 Indirect materials Packaging Materials 11,915,736 Oils & Greases 12,225,000 4 Indirect work Indirect salaries and wages 157,105,480 5 Driving Forces Extinction 30,854,427 Water 4,195,507 American Journal of Business Management, Economics and Banking Volume 18 Nov., 2023 P a g e | 88 www.americanjournal.org Electricity 10,458,045 Standby Tools 4,474,339 Oil Materials 17,360,732 6 Equipment Workers' Equipment 2,930,240 Stationery 5,019,938 7 Research & Development Publicity and Advertising 8,057,421 Research and consulting expenses 3,340,000 8 Maintenance Services Maintenance of buildings 2,230,920 Maintenance of machinery and equipment 4,461,841 Maintenance of transportation 594,912 Maintenance of office furniture and equipment 148,728 9 Administrative and marketing expenses Marketing expenses 15,625,535 Administrative expenses 17,197,880 10 Transport, dispatch and communication Relocation of workers 1,974,616 Public contacts 750,250 Hospitality 43,140 Fees 15,650,000 Travel and Dispatches 565,994 11 Other Service Supplies Lease of fixed assets 5,890,900 Banking Services 1,199,497 Total 971,443,184 Source: Table of the researchers' preparation based on data provided by the company. In table 2, resources have been grouped within homogeneous pools based on their interrelationships in terms of technology, skills or cost components. Resource characteristics should be combined and result in homogeneous resource pools, as well as to eliminate the complexity of the company. 3. Identification of elements of direct costs to products: Direct costs are addressed in the accounting of resource consumption by charging them directly to the cost objective (s), so the elements of direct costs (direct substances and direct wages) disbursed to each product have been identified on Centileter basis, as shown in table (3) below: Table (3) Identification of direct costs on products for (2018) Raw Product name Unit (Centilitre) Direct manufacturing cost Unit manufacturing cost rate (centileter) 1 Barzlon 15897 44،543،394 2802 2 Janden 16357 44,981،750 2750 3 Samaficol 0.5 18303 70،631،277 3859 4 Methadine 19402 50،309،386 2593 5 Methadine N 17607 70،410،393 9993 6 Nazordin 0.5 15709 33،648،678 2142 7 New Dixon 14470 35،219،980 2434 8 Nassovrin 19900 38،924،400 1956 9 Zankou- slef 19580 55،998،800 2860 10 Timosam 0.25 18004 46،972،436 2609 11 Timosam 0.5 18603 55،418،337 2979 12 Cyprosam 0.3 17075 45،778،075 2681 13 Dixon 16240 44،335،200 2730 Total 227147 637,172,106 2805 American Journal of Business Management, Economics and Banking Volume 18 Nov., 2023 P a g e | 89 www.americanjournal.org Source: Table of the researchers' preparation based on data provided by the company. In Table (3), distribution is based on the quantity of the product (Centeliter). It is the Company's measurement unit. The figures mentioned in the field of direct cost of manufacture were reached through the collection of the value of direct materials and direct wages of the product. The figures listed in the field of manufacturing cost rate of the unit were reached through the following formula: The product's share of direct costs = the direct manufacture cost of the product ÷ the quantity of the product, meaning that direct costs are addressed by charging them directly to the cost target (products) 4. Separation of prorated and fixed costs in resource pools: costs in each resource pool are segregated into fixed and variable and, in accordance with cost behavior, there are costs that are unchanged by the volume of production and are fixed during the financial period, Variable costs when the amount of inputs from expendable resources changes in proportion to the volume of production or so-called prorated costs and therefore fixed and proportionate costs in resource pools will be determined as follows: Table (4) Fixed and proportionate cost segregation Sources groups Sources Fixed costs Proportionate Costs Total Indirect materials Packaging Materials - 11,915,736 11,915,736 Oils & Greases - 12,225,000 12,225,000 total - 24,140,736 24,140,736 Indirect work Workers in Production Services 64,099,035 11,311,595 75,410,630 Staff in the Department 69,126,411 - 69,126,411 Marketing Workers 12,568,439 - 12,568,439 Total 145,793,885 11,311,595 157,105,480 Driving Forces Extinction 30,854,427 - ,42730,854 Water 167,820 4,027,687 4,195,507 Electricity 522,902 9,935,143 10,458,045 Standby Tools - 4,474,339 4,474,339 Oil Materials - 17,360,732 17,360,732 Total 31,545,149 35,797,901 67,343,050 Equipment Workers' Equipment 1,142,794 1,787,446 2,930,240 Stationery 375,642 4,644,296 5,019,938 Total 1,518,436 6,431,742 7,950,178 Research & Development Publicity and Advertising 8,057,421 - 8,057,421 Research and consulting expenses 3,340,000 - 3,340,000 Total 11,397,421 11,397,421 Maintenance Maintenance of buildings 2,230,920 - 2,230,920 Maintenance of machinery and equipment 2,989,433 1,472,408 4,461,841 Maintenance of transportation 594,912 - 594,912 Maintenance of office furniture and equipment 148,728 - 148,728 Total 5,963,993 1,472,408 7,436,401 Administrative and marketing expenses Marketing expenses 9,844,087 5,781,448 15,625,535 Administrative expenses 17,197,880 - 17,197,880 Total 27,041,967 5,781,448 32,823,415 Relocation of workers 1,974,616 - 1,974,616 Public contacts 750,250 - 750,250 American Journal of Business Management, Economics and Banking Volume 18 Nov., 2023 P a g e | 90 www.americanjournal.org Transport, Dispatches and Communications Hospitality 43,140 - 43,140 Fees 15,650,000 - 15,650,000 Travel and Dispatches 565,994 - 565,994 Total 18,984,000 - 18,984,000 Other Service Supplies Lease of fixed assets 5,890,900 - 5,890,900 Banking Services 1,199,497 - 1,199,497 Total 7,090,397 - 7,090,397 Source: Table of the researchers' preparation based on the company's submissions. Table 4 researchers allocated costs to appropriate resource pools and the classification of costs in each resource pool into constant and proportionate. This step is one of the main pillars of the resource consumption accounting process. It helps to extract variable cost rates through practical energy and fixed cost rates through theoretical energy and thus enables the identification of idle energy by separating fixed costs that do not add value to the company's core activities and keeping them in resource pools if the cost of the period is considered and the activities are charged at variable costs and fixed costs utilized 5. Determining the causes of resources for each resource pool: The appropriate causes for each pool of resources are identified as the quantified measure of the volume of outputs and projected resources, as well as the amount of resources to be spent in each pool of resources from reaching a certain volume of outputs. This is the application of one of the principles of the method of accounting for resource consumption, which is the principle of causation, which can be explained through the following table: Table (5) Cost causes for resource pools Resource pool Cost-generating Indirect materials Quantity of materials (centileter) Indirect work Direct working hours Driving Force Machine operating hours Equipment Number of workers Research & Development Quantity of materials (centileter) Maintenance Services Maintenance Hours Administrative and marketing expenses Number of days Transport, Dispatches and Communications Quantity of materials (centileter) Other Service Supplies Quantity of materials (centileter) Source: Table of the researchers' preparation based on data provided by the company. Based on table 5, the two researchers consider that the specific cost causes are appropriate and consistent with the nature of the resource pools. In the light of these causes, theoretical energy, its costs, practical energy and its costs, as well as the special rates of theoretical and practical energy, are determined. 6. Theoretical and practical capacities and resource pool rates: resource pools' capacities and constant and proportional ratios are determined, resource consumption accounting being theoretical energy (Design) of the company mainly to determine the fixed cost of the products, which means that the fixed indirect industrial costs identified for the activities are ultimately related to theoretical energy rather than actual production (Practical energy) achieved during the specified period which represents the projected demand for the output of resource pools tailored to the product's demand. In this way, untapped energy can be exploited whether it is idle, surplus or lost. Table (6) includes the theoretical and practical energy of resource pools, as follows: American Journal of Business Management, Economics and Banking Volume 18 Nov., 2023 P a g e | 91 www.americanjournal.org Table 6 Identification of theoretical and practical capacities and resource pool ratios Resource pools 1 2 3 4 5 6 7 Theoretical Energy Theoretical energy costs Practical Energy Practical energy costs Fixed cost rate (1/2) Prorated cost rate (3/4) Total Ratio 5+6 Indirect Material 292,000 Centeliter - 208,000 Centeliter 24,140,73 6 - 116 m/ Centeliter 116 m/ Centeliter Indirect Work 137,970 Hour 145,793,885 78,260 Hour 11,311,59 5 1,057 m/ Centeliter 145 m/ Centeliter 1,202 m/ Centeliter driving force 137,970 Hour 31,545,149 78,260 Hour 35,797,90 1 229 m/ Centeliter 457 m/ Centeliter 686 m/ Centeliter Equipment 75 worker 1,518,436 43 worker 6,431,742 20,246 M/worker 149,575 m/worker 169,821 M/worker Research & Development 292,000 Centeliter 11,397,421 208,000 Centeliter - 39 m/ Centeliter - 39 m/ Centeliter Maintenance Services 17,885 Hour 5,963,993 12,740 Hour 1,472,408 333 m/ hour 116 m/ hour 449 m/ hour Administrative and marketing expenses 365 day 27,041,967 260 Day 5,781,448 74,088 m/ day 22,236 m/ day 96,324 m/ day Transport, Dispatches and Communications 292,000 Centeliter 18,984,000 208,000 Centeliter - 65 m/ Centeliter - 65 m/ Centeliter Other Service Supplies 292,000 Centeliter 7,090,397 208,000 Centeliter - 24 m/ Centeliter - 24 m/ Centeliter Source: Table of researchers' preparation based on results and company data. Table (6) has been prepared based on tables (4) and (5) in terms of the adoption of cost causes and resource pools and the extraction of fixed cost rate based on theoretical energy and energy costs, according to the following formula: Fixed cost rate = fixed costs ÷ theoretical energy. The prorated cost rate is extracted based on the practical capacity and costs of the operation, according to the following formula: Variable cost rate = variable costs ÷ practical energy. Thus, the overall rate has been reached, and the quantification of resource outputs (causes of resource cost) is explained: The number of days of the year for design theoretical energy (365 days) and materials used per day at the rate (800 centiliters) in the company is raw materials used in the production process. This figure represents the daily rate used according to the energy of the company and customer requests in the department of eye drops: (365 × 800 = 292,000 centiliters theoretical/design energy) The company operates (5 days a week) and the number of weeks during the year (52 weeks), thus the number of working days per year (260 days): (260 × 800 = 208,000 centiliter operation power) Direct working hours (7 hours) per day, and number of employees in the department (54 workers): (7 × 365 × 54 = 137,970 hours theoretical energy work). (7 × 260 × 54 = 98,280 hours of operation energy per year). Direct working hours for production activities: 32 workers in production lines + 11 workers in packaging = 43 workers. So direct hours 43 × 7 × 260 = 78,260 hours actual power (process) for production. Number of workers required by theoretical energy = theoretical energy hours × Number of workers/actual working hours 137,970 × 54/98,280 = 75 workers. In the maintenance complex theoretical maintenance hours: 7 × 365 × 7 number of workers = 17,885 hours. American Journal of Business Management, Economics and Banking Volume 18 Nov., 2023 P a g e | 92 www.americanjournal.org Operational maintenance hours: 7 × 260 × 7 = 12,740 hours. 7. Identification and allocation of resource pools' costs to activities: The resource pools consumed will be determined in accordance with the activities and thereafter the costs of the pools will be allocated to the activities through resource drivers, if the costs collected in each resource pool will be apportioned to the extent that the activities are consumed from those resources. a. " Identification of expendable resources by activities from resource pools: This step identifies expendable resources by activities from resource pools as in table (7) as follows: Table (7) Resources consumed through activities from resource pools Sources Activity Indirect materials Indirect work Driving Force Equipment Maintenance Services Marketing and administrative expenses Production Management 7280 7280 4 2100 24 Communications 5460 5460 3 2100 18 Handling 3640 3640 2 2100 12 Operating 27300 27300 15 2100 91 Transport 10920 10920 6 2100 36 Storage 3640 3640 2 2100 12 Packaging 208,000 20020 20020 11 2100 67 Source: Table of researchers' preparation based on results. In table 7, resources consumed by activities have been identified for all (Centiliter) The packaging is assigned to this activity, and for the indirect work complex the share of each activity of hours depending on the number of workers in each activity above (4, 3, 2, 15, 6, 2, 11) factor respectively and corresponding working hours during the year (7 × 260 × 4 = 7280)... (7280, 5460, 3640, 27300, 10920, 3640 and 20020). For the maintenance complex, its hour was consumed equally between activities, and the marketing and administrative expenses pool by number of days per year but by share of the activity from days of the year depending on number of workers (260 ÷ 43 × 4 = 24)... (24 ،18 ،12 ،91 ،36 ،12 ،67 ). b. Determination of the costs of activities consumed by resources: In this step, the costs of activities consumed by resources are determined in accordance with the preceding two steps and as shown in table (8) as follows: Table 8 Distribution of resource costs to activities Source Activity Indirect materials Indirect wages Driving Force Equipment Maintenance Services Marketing and administrative expenses Total Production Management 8,750,560 4,994,080 679,284 942,900 2,311,776 17،678،600 Communications 6,562,920 3,745,560 509,463 942,900 1,733,832 13،494،675 Handling 4,375,280 2,497,040 339,642 942,900 1,155,888 9،310،750 Operating 32,814,600 18,727800 2,547,315 942,900 8,765,484 63،798،099 Transport 13,125,840 7,491,120 1,018,926 942,900 3,467,664 26،046،450 Storage 4,375,280 2,497,040 339,642 942,900 1,155,888 9،310،750 Packaging 24,128,000 24,064,040 13,733,720 1,868,031 942,900 6,453,708 71،190،399 Total 24,128,000 94,068,520 53,686,360 7,302,303 6,600,300 24025,044, 210،829،723 Source: Table of researchers' preparation based on results. Amounts based on Table (6) and Table (7) have been extracted in Table (8) for each activity by multiplying the theoretical and practical rates of resource consumption according to each pool, according to the following formula: activity cost = activity share of × resources (fixed cost rate + variable cost rate). American Journal of Business Management, Economics and Banking Volume 18 Nov., 2023 P a g e | 93 www.americanjournal.org 8. Distribution of activity costs to products: In this step, the activities costs are distributed to the products, but we will first identify the triggers of activities so that loading rates are extracted. Table (9) shows the causes of activities and loading rates as follows: Table 9 Identification of costs and causes of activities Row Activities Costs Triggers of activities Unit Activity Load Rate 1 Production Management 17،678،600 Planned Production Volume 220,983 80 2 Communications 13،494،675 Number of hours 7,464 1,808 3 Handling 9،310،750 Number of handling meals 2,395 3,888 4 Operating 63،798،099 Number of operating hours 2,305 27,678 5 Transport 26،046،450 Number of hours 13,877 1,877 6 Storage 9،310،750 Number of orders for disposal and receipt of materials 2,363 3,940 7 Packaging 71،190،399 Number of batches of total production 18,486 3,851 Source: Table of the researchers' preparation based on results and data provided by the company. In Table (9) activities (Production Department, Communications, Handling, Operation, Transportation, Storage, Packaging) and their own costs were identified. Activity costs were obtained through Table (8), the reasons for the activities through an interview with the specialists of the company in question, and the activity load rate through the following formula: loading rate = costs allocated in the activity complex ÷ the cause of activity. In order to be a basis for charging costs to the purpose of the cost (s), and after determining the causes and rates of activities, the costs of activities are apportioned to the products, as in table (10) below: Distribution of activity costs to product Table 10 Source: Table prepared by researchers based on the results Product name Unit Centiliter Activity Research & development Transport, Dispatches and Communicati ons Other Service Supplies Total Production management Contacts Handling Operating Transport Storage Packaging Barzlon 15897 1،237،248.74 944،448.38 651،688.328 4،464،921.25 1،822،921.77 651،580.551 4،982،239.91 619،983 1،033،305 381،528 16،789،865 Janden 16357 1،273،050.11 971،777.197 670،545.763 4،594،119.45 1،875،670.33 670،434.866 5،126،407.38 637،923 1،063،205 392،568 17،275،701 Samavekol 18303 1،424،505.49 1،087،389.99 750،320.909 5،140،684 2،098،819.72 750،196.818 5،736،298.49 713،817 1،189،695 439،272 19،330،999 Methadine 19402 1،510،039.64 1،152،682.11 795،373.778 5،449،355.35 2،224،842.93 795،242.238 6،080،733.39 756،678 1،261،130 465،648 20،491،725 Methadine N 17607 1،370،336.45 1،046،040.3 721،788.79 4،945،201.51 2،019،008.83 721،669.42 5،518،166.83 686،673 1،144،455 422،568 18،595،908 Nazordin 0.5 15709 1،222،616.88 933،279.206 643،981.376 4،412،118.52 1،801،363.66 643،874.874 4،923،319.3 612،651 1،021،085 377،016 16،591،306 New Dixon 14470 1،126،186.66 859،669.626 593،189.287 4،064،125.96 1،659،286.53 593،091.185 4،535،007.33 564،330 940،550 347،280 15،282،717 Nassovrin 19900 1،548،798.51 1،182،268.53 815،789 5،589،226.44 2،281،948.99 815،654.083 6،236،810.36 776،100 1،293،500 477،600 21،017،696 Zankou slaf 19580 1،523،893.21 1،163،257.17 802،670.785 5،499،349.44 2،245،254.33 802،538.039 6،136،519.95 763،620 1،272،700 469،920 20،679،723 Timosam 0.25 18004 1،401،234.59 1،069،626.26 738،063.574 5،056،705.17 2،064،533.15 737،941.513 5،642،589.63 702،156 1،170،260 432،096 19،015،206 Timosam 0.5 18603 1،447،854.21 1،105،213.13 762،619.234 5،224،943.71 2،133،220.95 762،493.112 5،830،320.76 725،517 1،209،195 446،472 19،647،849 Cyprosam 0.3 17075 1،328،931.39 1,014،433.92 699،979.757 4،795،780.99 1،970،126.71 699،863.994 5،351،434 665،925 1,109،875 409،800 18،046،151 Dixon 16240 1،263،904.11 964،589.19 664،739.41 4,561,567.21 1,849,452.10 666,169.31 5,090,551.67 633،360 1,055،600 389،760 17،139،693 Total 227147 17,678,600 13،494،675 9،310،750 63,798،099 26،046،450 9،310،750 71،190،399 8،858،733 14,764,555 5,451,528 239،904،539 American Journal of Business Management, Economics and Banking Volume 18 Nov., 2023 P a g e | 94 www.americanjournal.org Table 10 shows the share of each of the products of the Eye Drops Section in total indirect industrial costs, which are the sum of each of the following activities (production management, communications, handling, operation, transportation, storage, packaging) and distributed to the products using loading rates and cause of activities according to the following formula: product share of costs = loading rate * cause of activity. Total resources (Research &Development, transport, dispatches, communications, other service supplies) The share of the product's resource costs was determined by the quantity of the product. The share of the rate for the cost of research and development (39), transportation, dispatches, communications (65) and other service supplies (24), as shown in table (6), was apportioned to the products by the following formula: the share of the product in costs = the quantity of the product * the total rate of the resource pool. 9. Allocation of costs according to the method of accounting for resource consumption: In this step, the actual costs realized are compared with the costs apportioned according to the method of accounting for resource consumption for the purpose of determining the cost and proportion of idle energy, which represents the difference between actual and distributed costs, as shown in table 11 below: Table (11) Determination of the costs and proportion of idle energy Resource pool Actual realized costs (1 ) Apportioned costs (2 ) Idle Energy (1-2=)3 Ratio of idle power (3 /1 ) Indirect Materials pool 24,140,736 24,128,000 12,736 0،000527 Indirect Work pool 157,105,480 94,068,520 63,036,960 0.40 Driving force pool 67,343,050 53,686,360 13,656,690 0,20 Equipment 7,950,178 7,302,303 647,875 0,08 Research & Development 11,397,421 8,858,733 2,538,688 0,22 Maintenance Services 7,436,401 6,600,300 836,101 0,11 Administrative and marketing expenses 32,823,415 25,044,240 7,779,175 0,24 Transport, Dispatches and Communications 18,984,000 14,764,555 4,219,445 0,22 Other Service Accessories 7,090,397 5,451,528 1,638,869 0,23 Total 334،271،078 239،904،539 94,366,539 0,28 Table: Researchers' preparation based on results. In table 11, the ratio and costs of idle energy at the level of each resource pool are determined by the following formula: Unemployed energy value = actual realized costs - distributed costs. Ratio of inactive energy = value of inactive energy ÷ actual realized costs. Table 11 shows the total proportion of idle energy (28%), and these costs will not be charged to the product because these costs are the costs of inactive resources and have not been used in production. 3. 2. Comparison between the traditional system and the method of accounting for resource consumption: The actual indirect industrial costs in the traditional system (334,271,078 dinars), as shown in table 11, are therefore the share of the product in indirect industrial costs according to the following formula: the share of the product = indirect industrial costs ÷ the total quantity of products. (334,271,078 ÷ 227,147 = 1472 dinars) The indirect industrial costs apportioned in the method of accounting for resource consumption (239,904,539) were as shown in table 10. Therefore, the share of the product in the indirect industrial costs is: (239,904,539 ÷ 227,147 = 1056 dinars) American Journal of Business Management, Economics and Banking Volume 18 Nov., 2023 P a g e | 95 www.americanjournal.org Thus, the difference between the traditional system and the method of accounting for resource consumption is: (1472-1056 = 416), noting that the reason for the reduction in indirect industrial costs to this level is the result of the application of the resource consumption accounting method in the company in question. 3. 3. Evaluation of the performance of the responsibility and decision-making centers: To implement the performance appraisal process, there must be a set of criteria that can guide the evaluation of the performance of the company's responsibility centers, so that they are appropriate to the nature of the activity of each responsibility center. The criteria for evaluating the cost position are the elements of the costs controlled by the responsibility center, which are: 1. Direct material cost: This cost deviations are assessed by comparing actual material with standard during a significant period. 2. Direct wage cost: Employment efficiency is assessed by comparing actual wage cost to standard over a significant period of time. 3. Indirect industrial cost and efficiency is measured by comparing the actual of them to the standard during a significant period. Thus, the cost criterion depends on cost deviations to judge performance in order to better judge the centers’ performance and effectiveness, the cost measurement in these centers and the standard adopted must be more accurate, At this stage, the reports required by the performance appraisal process are prepared. Performance reports are the cost centers as outputs of the responsibility accounting system as they contain accounting, financial and normative data for various direct and indirect cost centers, The deviations between the actual and planned performance of the centers of responsibility reflect the demonstration of the responsibility center officials' skill in using the powers and responsibilities conferred upon them. 1. Measuring performance according to the traditional system: The performance of the head of the eye drops department is measured according to the traditional system of the company by matching the actual costs (Direct materials, direct wages, indirect industrial costs), as shown in the table (2) and table (11), measured by the traditional system with the planned costs obtained by meeting the specialists of the company in question, to extract the value and ratio of deviations, as shown in the report shown in table (12) below: Table 12 Report of the Head of the Eye Drops Department according to the traditional system Statement Actual scheme Deviations Ratio of Deviation Direct Material 378،498,056 350،600،000 (27،898،056 ) Un-preferred 8 % Direct wages 258،674،050 234،000،000 (24،674،050 ) Un-preferred 11 % Indirect industrial costs 334،271،078 211،000،000 (123،271،078 ) Un-preferred 58 % Total 971،443،184 795،600،000 (175،843،184) Un-preferred 22 % Source: Table of the researchers' preparation based on results and data provided by the company. American Journal of Business Management, Economics and Banking Volume 18 Nov., 2023 P a g e | 96 www.americanjournal.org In table 12, the ratio and value of deviations are measured according to the following equations: the value of deviations (preferred or not preferred) = actual costs - planned costs. The ratio of deviations was extracted through the following formula: ratio of deviations = value of deviations ÷ planned costs. From the report shown in table 12, it is clear that the performance of the Chief of the Eye Drops Section, relying on the traditional system of cost allocation, is not at the required level, because the value and percentage of deviations are high, especially the deviation of indirect industrial costs, because the traditional system is unable to allocate costs accurately and fairly. 2. Measuring performance according to resource consumption accounting method: The performance of the head of eye drops department is measured according to resource consumption accounting method by matching actual costs (Direct materials, direct wages, indirect industrial costs), as shown in the table (2) and table (10), as measured by the method of accounting for resource consumption against planned costs, to extract the value and ratio of deviations, as shown in the report shown in table (13) below: Table 13 Report of the Head of the Eye Drops Department according to the method of accounting resource consumption Statement Actual Scheme Deviation Deviation Percentage Direct material 378،498,056 350،600،000 (27،898،056 ) Un-preferred 8% Direct wages 258،674،050 234،000،000 (24،674،050 ) Un-preferred 11% Indirect industrial Costs 239،904،539 211،000،000 (28،904،539 ) Un-preferred 14% Total 877،076،645 796،600،000 (81،476،645 ) Un-preferred 10% Source: Table of researchers' preparation based on results and company data. From the report shown in table 13, it is clear that the performance of the Chief of the Eye Drops Section, relying on the method of accounting for resource consumption in allocating indirect industrial costs, has changed from that of the traditional system, because the value and percentage of deviations has changed by the decrease after the value of deviations for indirect industrial costs in the traditional system (123,271,078) Its proportion (58%) has become (28,904,539) and its proportion (14%), and the performance of the Director of this section is thus judged better than in the past by relying on the deviations outlined in the reports. Thus, after the findings, the hypothesis was accepted that differing deviations according to the method of accounting for resource consumption had an impact on the effectiveness of accountability. 4. Conclusions The method of accounting for resource consumption from important cost management systems is the result of its ability to track inactive energy for the purpose of reducing its ratio. The method of accounting for resource consumption from important cost management systems is also a result of its ability to provide information that helps detect deviations at an early time, thus allowing managers to take corrective action American Journal of Business Management, Economics and Banking Volume 18 Nov., 2023 P a g e | 97 www.americanjournal.org or exploit available opportunities. As well as providing information according to the method of accounting for resource consumption, it helps measure deviations that contribute to rationalizing management's decisions. Deviations after the use of resource consumption accounting method (10%), while deviations before the application of resource consumption accounting method (22%), this information directs management to make decisions in order to judge the effectiveness of the company's responsibility positions. The unemployed energy ratio was 28%, an information that helps the company's management to dispose of it or exploit it to improve performance. Based on the findings, there is a need to develop the traditional system of the company in question, which is no longer commensurate with today's business environment. As well as the need to take advantage of the application of resource consumption accounting in the company in question in order to manage costs because it provides information that helps detect deviations and thereby increase the effectiveness of the company's responsibility positions and reduce costs. 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