Variable costing as a managerial tool

Abstract

In this study, the relationships between the method of cost accounting, the pattern of classification of costs, the preparation of financial reports, the managerial decision making, and the performance of companies are examined. With the general fact that effective managerial decision making leads to managerial and company success, the variables that will enforce effectiveness are explored in this work. Textile industry of Turkey is choosen as the sample and the data collection method consisted of the questionnaires and interviews by the sampled companies' top managers, and financial data gathered by the Chamber of Industry of Istanbul. The statistical methods employed in the research are one-way frequency distribution, joint-frequency distribution, Pearson correlations and Discriminant analysis. The results have showed that the employment of computer in the operations of the company has direct relationship with the classification of costs as variable and fixed costs, the application of variable costing in internal reporting, the usefulness of balance sheet and income statement in long-term planning, short-term planning, in pricing and purchasing decisions and the usage of ratio analysis for the evaluation of the company performance. Direct relationships have also been observed between the application. of variable costing, the usage of breakeven analysis in managerial decision making, the clsssification of costs, the usefulness of balance sheet and income statement in long-term planning, investment decisions, and the usage of ratio analysis in evaluations.