Academy of Strategic Management Journal (Print ISSN: 1544-1458; Online ISSN: 1939-6104)


Development of the Cost Management Mechanism for Metal Products Manufacturing Based on Budgeting Method

Author(s): Olga Aleksandrovna Nikitina, Yulia Vladimirovna Litovskaya, Olga Stanislavovna Ponomareva

The article is dealing with the cost management mechanism, which is based on the budget planning and control method. Quantitative indicators of resources and goals allow the corporate leader to see, compare and combine different elements that are used in the operation of the organization. Budgetary method can be applied not only in the management of the enterprise in general, but in cost management as well. Budgeting is an effective quantitative method of linking planning and control. The application of the budgeting method will allow reducing the time span between planning and control, since control is carried out continuously. To form the general expenditure budget of the enterprise, which will be an integral part of the enterprise’s consolidated budget, the developed mechanism involves the creation of end-to-end system of budgets of all structural units of the enterprise that fully covers all corporate costs. Practical implementation of the developed mechanism is carried out in terms of PJSC “Interregional Metallurgical Company”, the budget of which is expressed in terms of value reflecting plans for receipt and expenditure of financial, material and energy resources of the enterprise, the planned major economic indicators and projected outcomes of the enterprise, prepared and adopted in the prescribed manner for the planning period. 

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