Application of the "activity-based costing" system in the shipbuilding industry, a case study of the construction of landing craft in Sadra Omid Chabahar Shipbuilding Company

Master's Thesis

Department of Executive Management

1st chapter

Research overview

Introduction 1-1

The necessity of globalization of companies and societies is an accepted and undeniable fact. In the current business environment, more than in any past period, the only thing that remains constant is the phenomenon of changes. The rapid and enormous changes of the last two decades in technology and the increasing role of information technology and computer systems in the management of organizations have transformed the way of management and leadership of organizations, and it has become almost impossible to manage and manage economic enterprises in the past. Today, one of the problems and challenges of managers of economic enterprises is to increase productivity and achieve a competitive advantage in order to sustainably remain in the business arena.

To ensure competitiveness and have a sustainable competitive advantage in the business environment and to create a suitable organizational platform, resorting to slogans and rhetoric cannot work. Management and its related processes play an important role in the continuity of activity and sustainability of economic enterprises in a competitive business environment.

At the same time as the growth and development of advanced technology and the ever-increasing complexity of activities, it is very important for organizations to understand these complexities and use this situation. In such a situation, having a broad vision and adopting appropriate strategies, managers should provide the necessary measures and preparations to use these opportunities. In addition to the rapid growth and change of technology, the highly competitive business environment that demands high quality, excellent service, and reasonable and low selling prices provides additional importance in understanding opportunities and applying appropriate methods to take advantage of these opportunities. Meanwhile, the life and survival of organizations requires the design and use of appropriate systems to face these conditions. Today, organizations must have many features in order to be able to adapt to these rapid changes. The sum of these characteristics is included in the characteristics of organizations at the world level. This point of view is based on three basic foundations, which are: 1) Just-in-time production system 2) Comprehensive quality control 3) Methods of calculating added value One of these important and fundamental features, whose mechanisms undoubtedly have a great impact on the future of the organization and the use of positions and It has competitive conditions, the use of new methods of calculating added value. The importance of paying attention and applying these methods is that by adhering to them, you can achieve higher added value and optimal use of organizational resources while providing appropriate information.

Global developments and challenges, information technology, the complexities of the production process and the need to respond to rapid changes in technology have caused the transformation of the methods of calculating added value, so that many of the methods of this perspective are affected by these challenges. It is obvious that the use of traditional management accounting methods does not meet today's diverse needs, so the need to design and use new methods that are affected by the changes and mechanisms of today's competitive and challenging world is one of the necessities of existing organizations. Many management accounting approaches and techniques have been created based on the concept of value creation. These techniques, focusing on the concept of value and value creation, have helped economic enterprises to adopt appropriate strategies for competition and survival in new competitive conditions. One of these methods is widely used today because of its capabilities. The system is "cost based on activity" [1] or the so-called "ABC" system.

The ABC system is one of the new costing systems for products and services that can be used together with the staged costing system and work order to provide more detailed information about costs and decisions. This system considers the effects of technology changes, the complexity and special features of each product in the calculation of costs by using appropriate methods.The superiority of this system over other costing systems is the ability to accurately identify costs and provide non-financial information to improve performance and activities. These abilities have caused its various applications in production and service systems to increase day by day.

1-2 Research topic and objectives

The topic of this thesis is the application of the "activity-based costing" system in the shipbuilding industry. This research will be done in Sadra Omid Chabahar shipyard. After reviewing and analyzing the current costing system of this factory, the activity-based costing system (ABC) is designed and presented, in which the main and value-added activities in the shipbuilding industry are identified and the costing of each activity will be calculated by determining the appropriate basis for cost sharing. In Sadra Omid Chabahar Shipyard

Inspection and analysis of shipbuilding industry activities process

Design and presentation of a new activity-based costing system (ABC) to correctly calculate the total cost of products

Comparison of the new cost system with the current cost system

Using the information obtained in order to optimally use the resources of the organization, machines, equipment and human forces

Outsourcing activities whose cost is high for the factory according to the information obtained.

Using the information obtained for appropriate pricing of products for sale

Using the ABC system to identify and eliminate activities that have

1-3 research method

Since the topic of the thesis is related to "applied research" [2] or "action research" [3], in order to apply the theoretical concepts of the proposed system, it is necessary to examine it in a "case study" [4]. For this purpose, "Sadra Omid Chabahar Shipbuilding Company" has been selected as the place of study.

In this regard, first the current costing system of Sadra Omid Chabahar Company will be examined, considering that the efficiency of the activity-based costing (ABC) system depends on the type of operation, geographical location, and cultural and social factors. Ensuring the efficiency of the proposed subject in relation to the design of the activity-based costing system (ABC) for the study site will be done. In this new system, the activities of service and production centers are first identified and defined to calculate the costs of the cost price. In order to identify and define the activities, observation and interview methods have been used to collect information. For this purpose, an effort has been made to identify the basic activities of this industry by using library studies as well as observation and review of production processes in shipyards.

With the help of interviews with experienced people and observation of ongoing work, a schedule of activities will be designed and prepared, and then the cost of all activities in service and production centers will be calculated. By doing this, the organization's resources that are spent on activities will also be identified.

Furthermore, while examining the organizational chart created in the organization, activity centers are identified and accounting ledgers are written based on the specified activities. Activities are identified and recognized based on the analysis and analysis of activities and their "added value"[5]. In the activity-based costing (ABC) system, activities with value are activities that create satisfaction for customers or are necessary to perform the work of the activity centers of other parts, and they use the performance of that activity and its results.

At the stage, the cost sharing bases are determined and the cost sharing rates are calculated for each base and the collected costs will be allocated to the products.