The Illomata International Journal of Management Ilomata International Journal of Tax & Accounting P-ISSN: 2714-9838; E-ISSN: 2714-9846 Volume 4, Issue 2, April 2023 Page No. 164-180 164 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc Profit or Planet? : Impact of Production and Environmental Costs on Sales Ivada Zanetha Darmaputri1, Valentine Siagian2 12Universitas Advent Indonesia, Indonesia Correspondent: 1932107@unai.edu 1 Received : Janaury 13,, 2023 Accepted : April 3, 2023 Published : April 30, 2023 Citation: Darmaputri, I., Siagian, V. (2023). Profit or Planet? : Impact of Production and Environmental Costs on Sales. Ilomata International Journal of Tax and Accounting, 4(2), 164-180. https://doi.org/10.52728/ijtc.v4i1.695 ABSTRACT: Lately, environmental problems such as pollution, poorly managed waste, and even depleting green land, have become issues that require companies to take action. But on the other hand, companies need well-allocated production costs, which of course have the aim of increasing company profits. That’s why, the purpose of this research is to analyze The Effects of Production Costs and Environmental Costs on Sales for primary and chemical industry firms with ISO 14001 certification that are traded on the Indonesia Stock Exchange. Specifically, SPSS version 27 is utilized for conducting multiple regression analyses as part of a quantitatively descriptive methodology. Annual and sustainability reports for 5 years from 2017 to 2021 out of 8 companies that have gone through a purposive sampling process are used as research samples. Based on the multiple regression analysis that has been carried out, the results show that partially, production costs have a significant effect on sales, and environmental costs have no significant effect on sales. Meanwhile, simultaneously both production costs and environmental costs have a significant effect on sales. Meaning that production costs and environmental costs are interconnected with each other, so when sales continue to increase, production costs and environmental costs will also increase. Keywords: Environmental Cost, Production Cost, Sales This is an open access article under the CC-BY 4.0 license. INTRODUCTION To achieve the expected goals, companies today are facing new focus. Initially, a company was only focused on a single bottom line or the value of a company from its financial condition, nowadays the focus became a triple bottom line or according to Elkington, 1944 in (Nababan, L., & Hasyir, 2019) the 3P concept which includes financial (profit), environmental (planet), and social (people) dimensions. The profit dimension is how the company aims to make a profit from activities such as sales carried out by the company. Then the planet dimension shows that the company should be responsible for managing the environment and its resources. Also, the well-being of the company's employees and other stakeholders is a key aspect of the human dimension. This demonstrates that https://www.ilomata.org/index.php/ijtc mailto:1932107@unai.edu https://doi.org/10.52728/ijtc.v4i1.695 The Effects of Production Cost and Environmental Cost on Sales Darmaputri, and Siagian 165 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc corporations' objectives in conducting operations should include not only financial gain but also care for the local environment and the well-being of the surrounding community. In the manufacturing industry, there are various activities carried out by the company, one of which is production activities. This activity certainly requires an allocation of costs called production costs. According to (Myrelid & Olhager, 2019) it is important for manufacturing firms to allocate costs correctly as a decision to the products that they made. (Harnanto, 2017) defines production costs as costs that are considered related to products which include direct and indirect costs for processing raw materials into finished products. Mulyadi's definition of manufacturing costs, on the other hand, are those that arise while taking raw materials and turning them into finished goods, (Mulyadi., 2015). This production cost can be broken down into the following categories: raw materials, labor, direct costs, and overhead. (Xi Chen & Bertrand M. Koebel, 2017) found that in production cost there are fixed costs and variable costs, and fixed costs represent 20% of the total cost which highlights its importance. According to (Raiborn & Kinney, 2013) there are 3 components in production costs, which are as follows: 1. Direct material which is any part of the product that is available and easy to identify. 2. Direct labor is the effort of individuals who produce products and provide services. 3. Overhead is a cost that is indirectly included in the production of a product or service provided. With the existence of production costs, it is hoped that companies can calculate the cost of making finished products and selling them to consumers to make a profit. However, over time, companies need to think about how the products that have been produced could have sustainable properties. (Soytas et al., 2019) define sustainability as processes that are created and modified to improve a company's social and environmental impact. According to (Hong et al., 2019) sustainability is not just for long-term survival of a company, but also preserve social ecosystems at large. (Loorbach et al., 2016) found out that ecological degradation is one of the factors that a company needs to be concerned about. In other words, companies need to think about the impact of their production activities and the effects on the environment and community welfare so that both natural and human resources can be used sustainably and passed on to the next generations. Reported from (Surjaya, 2022) in September 2022, PT. Saranagriya Lestari Keramik, which produces floor ceramics and roof tiles, was proven to have polluted the environment so the Bekasi Regency government together with the West Java Environment Agency sanctioned the company. It is known that PT. Saranagriya Lestari Keramik has been proven to have committed 13 violations in waste management, especially liquid and air waste. The company was found not fulfilling waste treatment procedures because there were hazardous and toxic materials (B3) in the disposal of waste. https://www.ilomata.org/index.php/ijtc The Effects of Production Cost and Environmental Cost on Sales Darmaputri, and Siagian 166 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc The neighborhood first noticed this issue three months ago, and after an investigation by the Bekasi District Environmental Agency, they confirmed that pollution had occurred, classifying it as moderate to severe. Article 100 of Law 32 of 2009, Concerning Environmental Protection and Management, was therefore broken. The increasing of various environmental problems such as pollution and environmental damage made companies have to find solutions to prevent this problem. (Bai et al., 2019) found out that if companies invest in green technologies and made carbon regulation, it will able to reduce carbon emission. In other words, one of many solutions that can be done is to allocate environmental costs. Businesses invest environmental costs into projects with the goal of bettering their environmental impact. Environmental costs according to (Ikhsan, 2009) are cost that include internal costs and external costs that relate to all costs associated with environmental damage and protection. (Hansen D.R. & Mowen M.M., 2018) classify environmental costs into 4 categories: internal costs associated with preventing environmental damage, external costs associated with repairing environmental damage, and internal costs associated with detecting environmental damage. Investment in preventive and detection operations, or the costs of preventing and detecting environmental damage, is one way for businesses to achieve effective environmental cost allocation. Such as the costs of waste treatment, reclamation, measuring waste levels, and others. According to (Waltho et al., 2019) research, it’s found that to make substantial reductions in emissions companies have to increase their cost. Conversely, if the company is unable to allocate its environmental costs properly, it can lead to additional costs that will affect the company’s financial performance. Therefore, it is expected that the allocation of environmental costs will make people put more of their trust to create a good and sustainable relationship with the company. Not only that, if the company can allocate production costs and environmental costs properly, it is expected that the company’s sales volume and profits will also increase. (Kwon & Lee, 2019) research backs this up, finding that a company can boost its returns by improving both its sustainability practices and the quality of its operations. Over time, companies are competing to fulfill the 3P concept as evidenced by the existence of CSR (Corporate Social Responsibility), which according to (Sultoni, 2020) represent a pledge on the part of businesses to act in an ethical manner and contribute to long-term economic growth. Research by (Jo et al., 2015) indicated that environmental cost was a factor in corporate social responsibility (CSR). Companies have implemented a wide range of programs aimed at achieving environmental management and community welfare. In order to gauge how well a company is doing in terms of environmental management, ISO 14001 certification is often employed. ISO 14001 is an EMS standard created by the International Organization for Standardization, as stated by (Deepak et al., https://www.ilomata.org/index.php/ijtc The Effects of Production Cost and Environmental Cost on Sales Darmaputri, and Siagian 167 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc 2015). According to studies conducted by (Feng & Wang, 2014), a corporation can increase customer happiness and loyalty by creating an EMS. (ISO Central Secretariat, 2015) describes ISO 14001 as an internationally recognized standard that indicates the criteria in the environmental management system. To obtain an edge in the market and the confidence of their stockholders, businesses can use this certification to improve their environmental performance by conserving resources and cutting down on waste. (de Jong et al., 2014) in their research found that if companies have ISO 14001certification, it can help them to develop their capabilities and give impact to the profitability. Beyond the corporate legitimacy gains, (Treacy et al., 2019) discovered that the ISO 14001 standard has benefited the organization in other ways as well. To obtain this certification, (Sadiq, N., & Khan, 2019) in their book write that companies must pay attention to clause 6.12 of ISO 14001 where companies and organizations are required to define and implement a procedure that describes how the company identifies and applies matters such as identifying all environmental laws; permits; and licenses that apply to products, processes, waste management whether solid, liquid, or gas; and periodic evaluation of environmental policies, along with the company’s compliance with environmental laws and other requirements. Based on the problems described, this research was conducted to examine the effect of production costs and environmental costs on sales. Sales are affected by production costs Manufacturing expenses may have an effect on a company's sales. (Albdullah, 2017) in his book defines sales as complementary activities to purchases made so that a transaction occurs. So it can be said that sales are a transaction made by consumers when they buy a product. While according to (Panjaitan, 2018) sales is a concept that focuses on existing products, using promotion as an attraction with the ultimate goal of making a profit. The factors that influence sales according to (Hidalyah , Al., & Sulakson, 2021) include the price set, the company’s strategy for promotion, and the quality of the products produced. (McGuian et al., 2016) argue if production costs increase, then companies must increase selling prices to maintain margin standards. This can affect market demand and reduce sales. However, on the other hand, if the company can reduce production costs, its market demand, and sales will increase. However, studies conducted by (Rupaida & Bernardin, 2016) reveal a positive and statistically significant relationship between production costs and revenue. This shows that when production cost increase, sales will also increase. The first hypothesis may be derived from the above description, and it is as follows: H1 = Production costs have a positive effect on sales partially. Sales affected by environmental costs https://www.ilomata.org/index.php/ijtc The Effects of Production Cost and Environmental Cost on Sales Darmaputri, and Siagian 168 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc In some cases, environmental costs can have a significant impact on a company’s sales volume. According to (Callan, S. J., & Thomas, 2013), every resource used for economic activities ends up as a residue that has the potential to cause environmental damage. Although this process can be delayed through environmental restoration, it cannot be stopped. Therefore, companies need to make policies regarding environmental management. Taking active steps to meet environmental regulations and demonstrating a commitment to environmental sustainability, can have a positive effect on sales volume. In a study conducted by (Suki, 2016), it was found that consumer attitudes towards environmentally friendly products. So it can be concluded that if consumers have a strong preference for environmentally friendly products, then the allocation of higher environmental costs can positively affect sales volume. Naturally deriving from the first, the second hypothesis is as follows: H2 = Environmental costs have a positive effect on sales volume partially Based on the two hypotheses above, the researcher also formulates a third hypothesis, namely: H3 = Production costs and environmental costs have a positive influence on sales simultaneously. According to the theoretical basis and previous research that has been discussed, the renewal in this study is how the existence of production costs and environmental costs put together can influence sales. Whether the company pays attention to the allocation of production costs and environmental costs can make the company's product sales increase or vice versa. This study also hopes to answer whether companies are better off relying on profits or taking responsibility by managing environmental policies. Figure 1. Framework Theory METHOD Thei obje icts that will bei e ixamineid are i production costs, einvironme intal costs, and sale is. The i re iseiarch useis nume irical me ithods to analyzei information culle id from primary source is (IDX-listeid firms' annual reiports and sustainability re iports) and che imical industry seictors that havei ISO 14001 ceirtification. Population and Sample Companieis from thei primary and cheimical industrieis listeid on thei Indoneisia Stock Eixchangei and holding ISO 14001 ce irtification that providei sustainability reiports and annual reiports for 2017- 2021 constitutei thei study's population. For samplei de iteirmination, this study will usei thei purposivei sampling meithod. This me ithod was chosein be icause i of the i re iseiarch limitations that reiquire i thei Environmental Cost Sales Production Cost H2 H3 H1 https://www.ilomata.org/index.php/ijtc The Effects of Production Cost and Environmental Cost on Sales Darmaputri, and Siagian 169 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc seile icteid samplei to be i following the i e ixisting objeictive is. Thei following factors we ire i consideire id whein se ileicting thei samplei for this study: Table 1. Purposive i Sampling No. Criteria Total 1. Primary and che imical industry seictor companieis that arei ISO 14001 ceirtifie id 73 2. Companieis that did not publish sustainability reiport and annual reiport in 2017-2021 (65) Numbeir of sample i companieis: 8 Thei amount of data use id during 2017-2021 40 Tablei 1 shows that 73 firms in the i basic and che imical industry arei accreidite id to ISO 14001 standards. Approximateily 65 busineisseis do not qualify. This proce iss of e ilimination yieilds 8 busineisseis and 40 sampleis worth of data that may be i analyzeid in furthe ir deipth. Thei 8 busineisseis that meie it the i criteiria arei as follows: Indoceime int Tunggal Prakasa Tbk.; Waskita Beiton Preicast Tbk, Surya Toto Indone isia Tbk.; Krakatau Ste ieil (Pe irse iro) Tbk.; Impack Pratama Industri Tbk.; Japfa Comfe ieid Indone isia Tbk.; and Toba Pulp Le istari Tbk. Variable Measurement Independent Variable (X1,2) Variableis outsidei of the i de ipeinde int variablei can be i consideire id indeipe inde int. Production and e icological eixpeinseis are i thei study's indeipeinde int variableis. Dependent Variable (Y) An indeipe indeint variablei acts as a driving forcei on a de ipeinde int variablei. This re iseiarch is ceinteire id on saleis as thei de ipeinde int variablei. Table 2. Summary of Re iseiarch Variable is Variables Dimensions Disclosure Indicator Measurement Production Cost (X1) Total production cost of thei company Production Cost = Direict Raw Mate irial Cost + Direict Labor Cost + Variablei Factory Ove irhe iad Cost + Fixeid Factory Ove irheiad Cost Nominal E invironmeintal Costs (X2) Total e invironmeintal cost of the i company Total einvironmeintal costs in the i company's sustainability re iport for the i pe iriod 2017-2021 Nominal https://www.ilomata.org/index.php/ijtc The Effects of Production Cost and Environmental Cost on Sales Darmaputri, and Siagian 170 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc Saleis (Y) Total reive inuei geine irate id from saleis Total reive inuei ge ine irateid from saleis in the i company's annual re iport for the i pe iriod 2017-2021. Nominal Research Model Thei following meithods weire i e imployeid to analyzei thei data for this study: (1) Quantitative i De iscriptions; (2) Thei Teist of Classical Assumptions; (3) Corre ilation Teist; (4) Hypothe isis Teist; (5) Coeifficie int of de ite irmination using multiple i re igre ission te ichnique is. Data analysis and proce issing will bei carrie id out with the i IBM SPSS Statistics 27 application. RESULT AND DISCUSSION Descriptive Statistics Table 3. Deiscriptive i Statistics N Minimum Maximum Me ian Std. De iviation Production Costs 40 163512400 6153867715706 802373990044.42 1556507837236.47 6 E invironmeintal Costs 40 744000000 391000000000 18671215416.98 60777650183.773 Saleis 40 183195700 0 8000149423527 1276575993475.75 2000485709143.09 3 Valid N (listwisei) 40 Source i: SPSS veirsion 27 proce isseid data Baseid on tablei 3 abovei, it is found that production costs as one i of the i indeipe indeint variableis in this study havei a minimum valuei of IDR 163,512,400. From the i calculation of production costs, thei maximum valuei obtaine id IDR 6,153,867,715,706. Whilei thei aveirage i value i obtaineid is IDR 802,373,990,044.42 and a standard deiviation of IDR 1,556,507,837,236.476. Anotheir indeipe inde int variablei that useis deiscriptivei statistical calculations is e invironmeintal costs which havei a minimum re isult of IDR 744,000,000. Through the i re isults of the i calculation of e invironmeintal costs, the i maximum valuei obtaine id is IDR 391,000,000,000. Whilei thei ave iragei obtaineid is IDR 18,671,215,416.98 and a standard de iviation of IDR 60,777,650,183.773. If we i usei reive inuei as thei de ipeindant variablei, thein we i geit a minimum valuei of IDR 1,831,957,000. As a reisult, the i higheist possiblei amount re iache id through total sale is is IDR 8,000,149,423,527. With an aveirage i of 1,276,575,993,475.75 and a standard de iviation of 2,000,485,709,143.093 Indone isian Rupiah (IDR). Classical Assumption Test Se iveiral assumptions must be i me it be ifore i a re ise iarcheir can draw valid re isults from a multiple i re igre ission analysis, theire ifore i theiy should be i che ickeid off be ifore i conducting any hypothe isis teisting. https://www.ilomata.org/index.php/ijtc The Effects of Production Cost and Environmental Cost on Sales Darmaputri, and Siagian 171 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc Thei normality teist, the i he iteirosce idasticity teist, thei autocorre ilation teist, and the i multicollineiarity te ist arei among thosei pe irforme id. Normality Test Table 4. Classical Assumption Te isting Re isults One-Sample Kolmogorov-Smirnov Test Unstandardizeid Re isidual N 39 Normal Parame ite irsa,b Me ian -.0000814 Std. De iviation 606559599776.14980000 Most E ixtreimei Diffe ire ince is Absolutei .307 Positivei .307 Ne igativei -.235 Teist Statistic .307 Asymp. Sig. (2-taileid)c .000 Montei Carlo Sig. (2- taileid)d Sig. .000 99% Confideince i Inteirval Lowe ir Bound .000 Uppe ir Bound .000 a. Teist distribution is Normal. b. Calculateid from data. c. Lillieifors Significancei Corre iction. d. Lillieifors' me ithod baseid on 10000 Monte i Carlo sampleis with starting seie id 2000000. Source i: SPSS veirsion 27 proce isseid data Thei proce isseid data has a normal distribution if the i significancei valuei of thei re isultant Teist Statistic is largeir than 0.05, as reiquireid by thei Kolmogorov-Smirnov te ist (seie i tablei 4 above i). Heteroscedasticity Test Figure 2. He ite irosceidasticity Scatteirplot Graph Source i: SPSS veirsion 27 proce isseid data https://www.ilomata.org/index.php/ijtc The Effects of Production Cost and Environmental Cost on Sales Darmaputri, and Siagian 172 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc Baseid on Figure i 2 above i, it is known that thei points are i scatteire id irre igularly or randomly, so it is concludeid that thei data doe is not occur heite irosceidastic probleims. Autocorrelation Test Thei re ise iarcheir doe is an autocorre ilation te ist on the i time i seirieis data to seie i if theire i is any association be itweie in thei diffe ire int me iasureime ints. Thei Durbin-Watson (DW) valuei is useid in this analysis. Table 5. Autocorre ilation Assumption Te ist Re isults Model Summaryb Mode il R R Squarei Adjusteid R Squarei Std. E irror of thei E istimate i Durbin-Watson 1 .977a .954 .951 339594003084.29640 1.707 a. Pre idictors: (Constant), E invironmeintal Costs, Production Costs b. De ipeinde int Variablei: Sale is Source i: SPSS veirsion 27 proce isseid data Baseid on tablei 5 abovei, thei Durbin-Watson valuei that has beie in obtaineid is beitweie in thei valueis of du and 4- du (1.600<1.707<2.400). Theire ifore i, it may be i infeirre id that the i conditions for the i proposeid re igre ission modeil havei be ie in satisfieid thei re igre ission be itweie in thei inde ipe indeint variableis Production costs (X1) and Einvironme intal Costs (X2), against Saleis (Y) has beie in fre ie i from autocorre ilation probleims. Multicollinearity Test Table 6. Multicolline iarity Te isting Reisults Coefficientsa Modeil Collineiarity Statistics Toleirancei VIF 1 (Constant) Production Cost 1.000 1.000 Einvironmeintal Costs 1.000 1.000 a. Deipeindeint Variablei: Saleis Sourcei: SPSS veirsion 27 proceisseid data As may bei seie in in tablei 6, thei final toleirancei valuei is 1.000. As this value i is largeir than 0.10 and thei VIF valuei discoveire id was 1,000, which is le iss than 10, wei can safeily infe ir that theire i is no multicollineiarity issuei. Results Multiple Linear Regression Analysis In this study, thei re iseiarche ir will form a re igre ission eiquation as follows: Se = α + β1 PrC + β2 EnC https://www.ilomata.org/index.php/ijtc The Effects of Production Cost and Environmental Cost on Sales Darmaputri, and Siagian 173 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc Wheire i: Se i (Y) = Saleis α = Constant βi = Coeifficie int of Reigre ission PrC (X1) = Production Costs E inC (X2) = Einvironme intal Costs Thei re isults of the i calculation of multiple i line iar re igre ission analysis using the i SPSS ve irsion 27 program will bei preiseinteid in the i following tablei: Table 7. Multiplei Lineiar Re igreission Re isults Coefficientsa Mode il Unstandardizeid Coe ifficieints Standardizeid Coeifficie ints t Sig. B Std. E irror Beita 1 (Constant) 296901749098.924 116237650328.533 2.554 .015 Production Costs 1.224 .064 .954 19.060 .000 E invironmeintal Costs -.479 1.642 -.015 -.292 .772 a. Deipe inde int Variablei: Sale is Source i: SPSS veirsion 27 proce isseid data Thei re igre ission eiquation useid to e ixplain thei eiffe ict of production costs and e invironmeintal costs on saleis is as follows: Sales = 296,901,749,098.924 + 1.224 PrC - 0.479 EnC Baseid on the i re igre ission eiquation abovei, it is known that production costs have i a positive i re igre ission coeifficieint, indicating that thei higheir thei production costs, thei more i saleis will increiasei. Conveirse ily, einvironme intal costs arei known to havei a neigativei re igre ission coeifficie int, indicating that thei higheir the i e invironmeintal costs, thei saleis will deicre iasei. T test Thei re ise iarcheir conducte id partial hypothe isis teisting as a teichniquei for ide intifying the i factors that influe incei a targeit variablei. Thei t valuei in this te ist with α = 5% is as follows: ttable = t (α/2; n-c-1) = t (0.025; 37) = 2.021 First, the i re iseiarcheir will te ist H1 https://www.ilomata.org/index.php/ijtc The Effects of Production Cost and Environmental Cost on Sales Darmaputri, and Siagian 174 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc Table 8. T Teist Re isults of the i E iffeict of Production Costs Partially Against Sale is Coefficientsa Mode il Unstandardizeid Coe ifficieints Standardizeid Coeifficie ints t Sig. B Std. E irror Beita 1 (Constant) 287710529387.269 110489515424.607 2.604 .013 Production Cost 1.224 .063 .954 19.304 .000 a. Deipe inde int Variablei: Sale is Source i: SPSS veirsion 27 proce isseid data Calculateid t-valuei is, as shown in Tablei 8: 19.304, which is largeir than thei minimum valuei of t- tablei 2.021. Thus, wei can acceipt H1 with a 95% leiveil of confideincei, which stateis that production costs significantly affeict saleis. Ne ixt, thei re ise iarcheir will te ist H2 Table 9. T Teist Re isults of the i E iffeict of Einvironme intal Costs Partially Against Sale is Coefficientsa Mode il Unstandardizeid Coe ifficieints Standardizeid Coeifficie ints t Sig. B Std. E irror Beita 1 (Constant) 1292182465611.010 335481523362.868 3.852 .000 E invironmeintal Costs -.836 5.338 -.025 -.157 .876 a. Deipe inde int Variablei: Sale is Source i: SPSS veirsion 27 proce isseid data Tablei 9 shows that thei calculateid t valuei is -0.157, which is leiss than thei thre ishold valuei of 2.021 in table i 8. Sincei H2 cannot be i acceipteid with a 95% de igre ie i of confide incei, it follows that e invironmeintal eixpe inditure is havei no appreiciablei impact on re iveinue i. F test He ire i, thei re ise iarcheir also put the i third hypothe isis to the i te ist, and thei outcome is weire i as follows: F table = F (c ; n-c) = F (2 ; 40) = 3.23 https://www.ilomata.org/index.php/ijtc The Effects of Production Cost and Environmental Cost on Sales Darmaputri, and Siagian 175 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc Table 10. F Teist Re isults of thei E iffeict of Production Costs and E invironme intal Costs To Sale is Simultane iously ANOVAa Mode il Sum of Squareis df Me ian Squarei F Sig. 1 Reigreission 141167843470823650000 000000.000 2 7058392173541183000000 0000.000 181.751 .000b Reisiduals 139807528270628440000 00000.000 36 3883542451961901300000 00.000 Total 155148596297886500000 000000.000 38 a. Deipe inde int Variablei: Sale is b. Pre idictors: (Constant), E invironmeintal Costs, Production Costs Source i: SPSS veirsion 27 proce isseid data Baseid on table i 10, it is known that the i valuei obtaine id from thei comparison of F and Ftablei is e iqual to (181.75>3.23). So it is concludeid that H3 can be i acceipteid, which me ians that production costs and einvironmeintal costs havei a significant eiffe ict on saleis simultaneiously. Coefficient of Determination Thei coe ifficie int of de ite irmination was eixamineid by scieintists to deimonstratei thei eixte int to which thei inde ipeinde int variablei influe inceid the i re isult of the i study's deipe indeint variable i. Thei tablei be ilow de itails thei outcomeis of our e ixpe irime ints: Table 11. Coeifficieint of Deiteirmination Model Summary Mode il R R Squarei Adjusteid R Squarei Std. E irror of the i E istimate i 1 .954a .910 .905 623180748415.891 a. Pre idictors: (Constant), (X2 ) E invironme intal Costs, (X1 ) Production Costs Source i: SPSS veirsion 27 proce isseid data In table i 11 abovei, it can be i seiein that the i R Squarei valuei obtaineid is 0.910. Baseid on the isei re isults, it is found that Production Costs, and E invironme intal Costs contributei 91% of the i influe ince i on Saleis, whilei thei re imaining 9% is a largei contribution of influe ince i deirive id from othe ir factors not e ixamineid. Thei re iseiarche ir also teisteid thei coeifficie int of de ite irmination partially by using the i Eiffe ictive i Contribution valuei which can bei found through multiplying thei standardize id coeifficieints beita by thei correilation coeifficie int. The i re isults of thei calculation will bei preiseinte id in the i following tablei: Table 12. Partial Deiteirmination Coe ifficieint Mode il Standardizeid Coeifficie ints Corre ilations Partial Coeifficie int of De ite irmination Beita https://www.ilomata.org/index.php/ijtc The Effects of Production Cost and Environmental Cost on Sales Darmaputri, and Siagian 176 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc Production Costs (X )1 0.954 0.954 0.910116 E invironmeintal Costs (X )2 -0.015 -0.025 0.000375 Total Eiffe ict 0.910491 Source i: SPSS veirsion 27 proce isseid data Tablei 12 provide is information about the i amount of influe ince i contribution give in by e iach variablei partially. Sincei Production Costs is known to have i an e iffe ict of 0.910116 on Sale is and E invironmeintal Costs is known to have i an impact of 0.000375 on Sale is, it is eivideint that Production Costs is thei variablei that de iliveirs the i most ove irall contribution of influe ince i. The i re isults of thei curreint T te ist corroborate i thosei of the i prior one i, proving the i validity of thei the iory. Discussion Effect of Production Costs on Sales De ipeinding on the i findings of thei te ists of hypotheiseis, thei conclusion that can bei drawn is that production costs havei a significant eiffe ict on saleis. Wheire i thei highe ir the i production cost, the i impact on increiasing saleis. This stateime int can bei prove in by thei partial T te ist re isults wheire i thei t valuei obtaine id is 19.304 which is greiateir than ttable i 2.021. This hypotheisis is of coursei also supporteid by thei re isults of thei coe ifficieint of de ite irmination te ist, wheire i production costs contribute i 91.05% of the i influe ince i on sale is. All e iight companieis listeid on the i Indone isia Stock E ixchangei have i high production costs duei to high production volumeis as a contributing factor. With a high production volume i, this meians that consumeir de imand is high. In othe ir words, the i company's saleis will bei high as weill. Theisei findings corroborate i thosei of (Dzakiyyah et al., 2022), who found that raising manufacturing costs had a favorablei and significant impact on saleis. The Effect of Environmental Costs on Sales Using a partial T teist, wei find that e invironme intal e ixpeinseis do not significantly affe ict reive inue i, sincei thei t valuei of -0.157 is leiss than thei ttablei valuei of 2.021 at a significance i thre ishold of 0.876> 0.050. This reimark shows how an increiasei in thei company's einvironme intal e ixpe inditure is may not automatically translatei into higheir saleis for the i busine iss. Thei re iason for this to happe in is that the i e iight companieis listeid on the i Indone isia Stock Eixchangei allocatei more i of the iir e invironmeintal costs to CSR programs, which are i aimeid more i at incre iasing company valuei and peirformancei. That is why this study has not be ie in ablei to prove i a significant influe incei be itweie in e invironme intal costs and saleis partially. The Effect of Production Costs and Environmental Costs on Sales Simultaneously Hypothe isis teisting was peirforme id using the i F teist and the i coeifficie int of de ite irmination, thei e iffe ict of production costs and einvironmeintal costs on saleis from Ftablei is (181.75> 3.23). Thei significancei le iveil of 0.000 < 0.050 and the i coeifficieint of de iteirmination of 0.9105 show that production costs and einvironmeintal costs consideirably affeict saleis. Thei re imaining 8.9% is attributable i to a factor not inve istigateid in this study. https://www.ilomata.org/index.php/ijtc The Effects of Production Cost and Environmental Cost on Sales Darmaputri, and Siagian 177 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc This happeins beicausei production costs and einvironmeintal costs arei inte irconne icteid with onei anotheir, so that saleis will increiasei, and if saleis continuei to incre iasei, production costs and e invironmeintal costs will also increiasei. Anotheir factor that causeis this to happein is that thei e iight companieis listeid on thei Indone isia Stock E ixchangei combine i thei allocation of production costs and e invironme intal costs to beine ifit from theiir saleis. It can be i se ie in in how the i companieis produce i theiir products. If production costs incre iasei, the i production volume i increiaseis which can cause i thei numbe ir of sale is to incre iasei. Howe iveir, whe in production volumei increiaseis, companieis arei re isponsiblei for carrying out einvironme intal manageime int in ordeir to avoid einvironme intal proble ims. This can be i achie iveid by allocating e invironmeintal costs. CONCLUSION This reiseiarch shows that companie is should pay atte intion to the i allocation of the iir production costs and einvironme intal costs. Although in this study the ire i was no significant re ilationship found be itweie in e invironmeintal costs and sale is partially, the i simultaneious eiffe ict of production costs and e invironmeintal costs shows that production costs and e invironmeintal costs arei two matte irs that are i important in thei company's saleis. Production costs do havei a direict reilationship with saleis beicausei whein production costs increiasei, thei volumei of production will increiasei along with incre iaseid consumeir de imand. But einvironme intal costs arei no le iss important to pay atteintion to. If companieis do not consideir the i propeir allocation of e invironmeintal costs, einvironmeintal proble ims reisulting from thei lack of company manage imeint of e invironmeintal policieis may occur, and this not only hampe irs the i company's products but also re iduceis public trust. Suggestions : a. For the i Company Companieis can increiasei eifforts to pre iveint e invironmeintal probleims by seitting policieis and allocating einvironme intal costs. Although this adds to production costs, if it is allocate id in a planneid and eifficieint manne ir, thei sustainability of thei company will bei guarante ieid and thei valuei of the i company with consumeir confide incei will increiasei. b. For Inve istors Inve istors can consideir inve isting in companieis that pay atte intion to e invironme intal issueis by allocating einvironme intal costs and having ce irtifications that arei einvironmeintally frieindly. Thus, inveistors can avoid the i risk of busine iss continuity disruption. In othe ir words, inve istors can bei freie i from companie is that are i e ixposeid to le igal proble ims duei to the i impact of e invironme intal probleims, pe ioplei who do not trust the i company and proteist, or othe ir things that can harm thei company as weill as inveistors. https://www.ilomata.org/index.php/ijtc The Effects of Production Cost and Environmental Cost on Sales Darmaputri, and Siagian 178 | Ilomata International Journal of Tax & Accounting https://www.ilomata.org/index.php/ijtc c. For the i Gove irnme int (Ministry of E invironmeint and Fore istry) Thei goveirnme int is eixpe icte id to urgei all companieis to pay atteintion to einvironme intal issueis and obtain ISO 14001 ceirtification or othe ir einvironmeintally frieindly ceirtifications. d. 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