Corresponding Author: Mega Novita Sari
E-mail: [email protected]
INTRODUCTION
The process of globalization,
industrial development, intense market competition in Indonesia and changing
business philosophies in world market centres have encouraged companies to
provide high-quality products at low costs (Ginanjar, 2017). Suppose a company operates in
an industrial context where environmental changes can be predicted (Sugiyanto,
2018). In that case, the company can
use a formal and rational process to develop a strategy first and then design a
management control system to implement that strategy (Mansour, 2016). Strategic plans generally have a term of five
years, 10 years or more (Butarbutar
et al., 2022). In general, every company
prepares a budget as a guideline for carrying out activities, which is then
reported to related parties to support good corporate governance and achieve
company goals. The comparison between planned and actual results for control
purposes is meaningless if the classification of costs and income used in the
profit plan differs from what has been planned (Anik, 2013). Activity-Based Budgeting
(ABB) is the key to planning value-driven factors because Activity-Based
Budgeting (ABB), which is equipped with feature costing (cost conditioning) is
able to provide correct information about what factors trigger value, sources
irregularities, and costs (Adisaputro
& Anggraini, 2011).
Activity-Based Budgeting (ABB)
allows management to direct all the efforts of members of the organization to
create value (value creation) through satisfying customer needs and continuous
improvement of processes. �E-Learning Module Arrangement Budgeting Based
on the Activity Based Budgeting Model, the results of this study indicate that
employee cost is the most dominant cost and the Activity-Based Budgeting model
provides more accurate information and time allocation for working hours for
each activity that is under capacity and over capacity (Amin & Nengzih,
2021); (Arnold & Artz,
2019). This is also supported by Activity-Based Budgeting
research conducted by Jenerita and Nengzih, whereby budgets can be prepared
better using the ABB model. This budget approach is useful for overcoming the
limitations of conventional budgets that are less focused on the customer and
do not motivate organizational members to improve the processes used to serve
customers (Prasetyo et al., 2018).
By simulating each process, you can get a more
realistic picture of the process and product. You can identify weaknesses and
possible changes in the process (Wisada & Sudarma,
2019). Determining the variants with Activity-Based
Budgeting (ABB) management can focus more on improving. Such is the phenomenon
that occurs at PT ASN where the company still uses incremental Budgeting for
its employees' overtime costs, so there are obstacles faced by the company,
among others, the company in preparing its budget is not based on the thoughts
and analysis of a series of activities that must be carried out to achieve
predetermined goals.
The objectives of this study are as analyzing the
application of Activity Based Budgeting to employee overtime costs with the
Time Driven Activity Based Costing method and analyzing the comparison/difference
of Activity Based Budgeting with traditional methods and its effect on the
realization of employee overtime costs in controlling employee overtime costs.
Based on the research objectives above, this research can provide benefits to
the company as a useful input as a comparison tool in determining employee
overtime costs, to future researcher to be used as a reference for further research and can
be used as a worthy reference as a scientific work, and to readers for
information about the application of Activity Based Budgeting and Traditional
Budgeting in a telecommunications service company.
METHODS
This research uses
a descriptive study because it focuses on the method of compiling employee
overtime costs which have been prepared by PT ASN so far. This study uses the
Activity Based Budgeting method with TDABC as the financing method.
The author uses a
qualitative approach because the writer wants to understand the phenomenon of
compiling employee overtime fees at PT ASN to clearly understand the conditions
of the subjects studied.
The analytical
method used in this study uses a qualitative descriptive analysis method with
primary and secondary data (Diana & Rofiki, 2020), which is an analysis used to explain the reality of
implementing Traditional Budgeting that occurs at PT ASN with the Activity
Based Budgeting method which is described as following:
1. Analysis of the Application of Activity-Based Budgeting
a. Determine the standard capacity cost of each human
resource used for each proposed employee overtime
b. Identify the main activities that require costs in the
work process.
c. Determine the approximate time each resource will take to
do the job.
d. Calculate the standard capacity cost of each resource.
e. Arrange Activity-Based Budgeting for each cost according
to each activity.
2. Comparing Activity Based Budgeting with Traditional
Budgeting
3. Analyzing the results of a comparison between
Activity-Based Budgeting and Traditional Budgeting.
RESULTS AND DISCUSSION
The overtime cost in this discussion includes two
departments, namely finance and sales (Amir & Rustan, 2020). The preparation of ABB using the Time Driven Activity
Based Costing (TDABC) method is by calculating the standard capacity cost of
each resource. One month only allowed for a maximum of 30 hours of overtime (Farida & Nurwidyaningrum, 2017). The practical capacity used in this study is 90% of the
time, effectively carrying out its activities or 10% of free time (Siregar & Mukhsinuddin, 2020). So that the effective working hours become 162 hours.
The next step that can be taken is to calculate the total cost of resources in
the employee's work process (Adawiyah & Sukmawati, 2013). In this process, calculations will be carried out for
each main activity that has previously been prepared in each work process. This
main activity is based on the overtime form submitted by each employee in each
departmental unit owned by PT ASN. The next stage is to calculate the amount of
used capacity costs that will be incurred as employee overtime costs.
Apart from the SOP
data for each departmental unit, this calculation is supported by the results
of the recapitulation of the actual number of hours of overtime employees use
to find out the time to complete their work. The cost of used capacity is the
cost that will be incurred as employee overtime costs (Matswaya et al., 2019). The following is the level of employee overtime
capacity usage. If the level of capacity utilization is less than 100%, there
will be under capacity in the department concerned. Conversely, if the level of
capacity utilization exceeds 100%, there will be an overcapacity in the
department concerned.
Table 1 . Calculation
|
Unit
Name
|
Total
workforce
|
Time-Work
Budget (Hour)
|
Time-Work
Practical (Hour)
|
Capacity
Used
|
Status
|
|
Sales
Marketing
|
2
|
300.00
|
324.00
|
93%
|
Under
Capacity
|
|
FAD
|
1
|
168.50
|
162.00
|
104%
|
Over
Capacity
|
Source: Processed from the results of observations,
interviews and documentation of PT ASN
The results of the table above show that Sales &
Marketing units with under capacity status have 93% used capacity and FAD units
with over capacity status with 104% used capacity. Comparison between the
employee overtime budget prepared using the traditional budgeting method and
the employee overtime budget prepared using the activity-based budget method at
PT ASN results in a better employee overtime budget prepared using the ABB
method. This is because the overtime cost for employees prepared using the
traditional or realized method is higher in value than the ABB method by 14%.
Applying the activity-based budgeting method can increase the effectiveness of
employee overtime costs because it can prove that there are savings in overtime
costs and can increase profits so that the ABB method can control the overtime
budget more efficiently and better (Ratnawati & Kusniawati, 2016). The ABB method can be proposed to companies to control
their employees' overtime costs. Look at the capacity used in the two
departments. The Sales & Marketing unit is under capacity at 93%, and the
FAD unit is over capacity used at 104%. The Board of Directors should consider
adding employees to the two departments to prevent disruption from working
productivity and so as not to potentially affect company performance.
CONCLUSION
Activity Based Budgeting (ABB) can be applied
using the Time Driven Activity Based Costing (TDABC) method at PT ASN by first
determining which activities are used as cost drivers. Through the TDABC
method, the standard cost of each activity is obtained by dividing the capacity
of the employee's overtime costs by the practice capacity using a one-time
equation. After getting the standard cost, the result is multiplied by the
total capacity of the resources used. ABB produces a value that is closer to
the realized value of PT ASN's employee overtime costs. With ABB, the results
obtained also have a lower value compared to traditional methods, so the ABB
method can control employee overtime budgets more efficiently and better. The
ABB method can be proposed to companies to control their employees' overtime
costs.
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