Home⇛International Journal of Multidisciplinary: Applied Business and Education Research⇛vol. 6 no. 10 (2025)

Optimizing Financial Decision-Making: Use of Relevant Costing Techniques in Manufacturing Businesses in the Philippines

Michael B. Bongalonta

Discipline: Business Computing

 

Abstract:

This study investigates the application and effectiveness of rele-vant costing among manufacturing businesses in Bulan, Sorsogon, with an emphasis on their impact on business performance. The re-search specifically assesses the extent to which relevant costing principles—such as identification of relevant and irrelevant costs, incremental analysis, pricing and cost control decisions, investment evaluation, and decision-making under resource constraints—are utilized by local manufacturing owners. Additionally, it examines key business performance indicators including gross profit rate, op-erating profit rate, and production yield rate, and explores the rela-tionship between relevant costing utilization and business perfor-mance outcomes. Employing a quantitative research design that integrates de-scriptive and correlational approaches, the study surveyed 94 man-ufacturing business owners from a population of 124 registered en-tities, with data drawn from official local government records and audited financial statements spanning 2022 to 2025. Descriptive statistics revealed that relevant costing is “sometimes” applied in decision-making processes, with pricing and cost control decisions showing relatively higher utilization compared to incremental anal-ysis and investment evaluation. Business performance analysis in-dicated low profitability levels, reflected by a gross profit rate of 17.46% and an operating profit rate of 3.75%, while production ef-ficiency, measured by production yield rate, was moderate at 83.57%. Canonical Correlation Analysis established a statistically significant moderate relationship between relevant costing prac-tices particularly in pricing, cost control, and investment appraisal and financial performance indicators. However, the inconsistent ap-plication of these practices limits their potential to fully enhance profitability, suggesting that other factors such as market dynamics and operational capabilities also influence business outcomes.



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