Relationship between the degree of sophistication of System Costs and Cost Management Practices in agribusiness companies

A cost system represents how various aspects of the identification, recording, control and management of costs are operationalized. In this article, we identify how the level of sophistication of the cost systems utilized by agribusinesses located in the northeastern Brazilian state of Pernambuco relates to the cost managementpractices utilized by these enterprises. A random sampling was made of companies from the most important agroindustrial regions of the State. Eighty-eight structured interviews were conducted with company managers. Seventeen different cost management practices were examined. Responses were grouped in accordance with the level of sophistication of the cost systems utilized. Significant relationships were found between the degree of sophistication of cost systems and six cost assessment, recording and control practices. How cost information is used in decision making was found to be less sensitive to the level of cost system sophistication, with only two of these practices seen to be significantly associated. Some results of this study differ from premises found in the theory. These inconsistencies suggest the presence of organizational factors that may influence cost management practices. Further research of a qualitative nature is indicated in order to elucidate these influences.