Integration between Value Engineering Technology and Activity-based Costing and their Impact on Reducing Costs: Applied Research in Baghdad Soft Drinks Company/Private Shareholding

The research mainly aims to integrate activity-based costing and value engineering and consider their role in reducing costs for industrial facilities in the face of the modern business environment characterized by many developments and rapid changes. The research problem is that traditional cost accounting methods are insufficient to provide organizational units with useful information in many administrative decisions, especially those related to product quality, to calculate costs and meet requirements correctly and can be replaced by modern cost management methods. Moreover, to find compatibility between them in a competitive environment in the public and private sectors, The study is based on the following hypotheses: There is a significant relationship between the integration of value engineering technology and activity-based costing and cost reduction, and the integration of value engineering technology and activity-based costing has a significant effect on cost reduction.

Introduction

Due to the development of the modern business environment and the subsequent development of information technology, each unit seeks to ensure its survival and continuity in a highly competitive market. The competitive priorities pursued by each unit, such as quality, time, flexibility, and cost, are different; in order to meet the needs and requirements of customers, needed, start looking for modern cost management methods to achieve their goals, including activity-based costing and value engineering methods, as it is the ABC method that works to reduce costs for industrial units through good energy management and optimal exploitation of available resources. Analyze the activities, identify activities that add value and do not add value, and reorganize them in a way that ensures workflow and rapid response in the shortest time and at the lowest cost to meet the needs of customers and strive to reduce costs, evaluate performance and control, which enables management to make sound administrative decisions, which will be compatible with the interests of unity and progress. Value engineering focuses on reducing costs, providing high-quality products and services, and competitive modern standards that meet customer needs.

Research Methodology

Research Problem

The problem of the study revolves around the inadequacy of traditional costing methods in providing the unit sector with useful information for many administrative decisions, especially those related to product quality, in a competitive environment in the public and private industrial sectors, and correctly calculating costs based on their availability. Requirements, the ability to meet them, and workers’ weak awareness of modern cost management methods. Moreover, search for compatibility between them.

Research Objectives

The research aims to achieve all of the following:

1. Explaining the knowledge base of activity-based costing and its role in making informed management decisions for business entities.
2. Studying the value engineering method and its importance in improving the performance of the economic unit.
3. Achieving harmony between activity-based costing and value engineering methods and their role in reducing costs.

The Importance of Research

The importance of the research lies in the importance of combining value engineering technology with activity-based costing and their adaptability to environmental changes, which brings challenging factors and pressures to the future of economic entities and provides a reason for the emergence of economic entities. The role of this integration is to help business entities reduce costs and increase the value of their products by identifying non-functional capabilities. Necessary but does not bring any added value. Value is considered from the business entity and customer perspective, and efforts are made to exclude it.

Research Hypothesis

The research is based on the following hypotheses:

1. A significant relationship exists between integrating value engineering technology and activity-based costing and cost reduction.
2. The integration of value engineering technology and activity-based costing significantly affects cost reduction.

Literature Review

Askaranyet al. (2007), which was entitled Technological Innovations, Activity-Based Costing, and Satisfaction. The research aims to examine the level of satisfaction of current users of management accounting techniques and their level, particularly the satisfaction of ABC users compared to non-users. One of the most important conclusions is that there is a statistically significant relationship between technological change in manufacturing practices and the spread of ABC. However, there is no statistically significant relationship between the spread of ABC and the level of satisfaction with its application of management accounting techniques. One of the research recommendations is that the reality behind the slow diffusion of innovations in cost accounting and management may be related to shortcomings in new technologies, and further study is recommended on the impact of shortcomings in innovations in cost accounting and management on their diffusion.

Kowsari (2013), it was entitled Activity Based Costing vs. Volume Based Costing: Relevance and Applicability. The research aims to examine performance evaluation and help determine the performance level for cost comparison. One of the research’s most important conclusions is achieving better product costing and pricing. Most companies replaced volume-based costing systems with activity-based accounting systems and recommended financial and non-financial analysis and useful measures for managers and management accountants in the decision-making process instead of volume-based costing. Management accountants must collaborate with engineers, manufacturing and operating managers to form the design team.

Eneyo and Shah (2018), entitled Integrating Value Engineering and Lean Six-Sigma For Enhanced An analytical study/Integrating Value Engineering and Six-Sigma for Lean Production/America. The study’s main objective is to explore the underlying factors regarding the similarities and differences between value engineering and Six Sigma-Sigma if they combine to improve manufacturing processes continuously.

Sahib (2023), entitled Technological Value Engineering and its Role in Reducing Costs and Implementing a Leadership Strategy An Applied Study, whose goal is to clarify the role that value engineering technology can play in reducing costs and increasing the value of product technology by upgrading the product of the economic entity (clothing factory). Men’s products in Najaf Al-Ashraf to the level of competitive products. One of its most important conclusions is that the factory cannot sell at prices that cover the costs of producing its products due to competition from foreign products offered in the local market at a lower cost. The study recommends holding training courses for employees to familiarize them with strategic cost management techniques and developments in accounting and management to develop human resources in general and cost accounting in particular in the research laboratory sample.

The Theoretical Side

Value Engineering (Emergence and Definition)

In 1958, the American Society of Value Engineers was established due to the proposal of a group of practitioners of this method and those interested in it in the private and public sectors to hold professional meetings to exchange ideas and advance the profession. Value engineering (VE) was soon used to improve value in the private sector, government projects, and building and construction (Alazemi, 2011). The name of the American Society was changed in 1995 to become the International Society of Value Engineers (SAVE) to be more comprehensive, as its membership includes Australia, Japan, and India (Shinar, 2009). It is defined as “activities concerned with improving design and specifications in the research, development, and production stages of product development” (Heizer & Render, 2011). Many definitions, including Fuling, have known value engineering as a technology through which management seeks to use the lowest cost of the product’s life cycle to achieve the needs and requirements of customers reliably through the work of the economic unit and its innovations, which aims to maximize the value of products (or processes) and use resources effectively (Liu, 2011), Rad and Yamini defined it as a modern technology based on innovation and collective effort to manage, solve problems, reduce costs, and improve the quality and performance of projects, products and processes (Rad & Yamini, 2016) As Hendrianto et al. defined it as a management style that seeks to achieve the best functional balance between costs, performance, reliability, and a problem-solving tool (Hendriantoet al., 2018).

From the above, it became clear that the previous definitions focused on improving production processes and products at the same time, on organized and systematic work when implementing value engineering, and focused on the method of collective work (the team), and also focused on the involvement of various specializations in the members of the work team charged with studying value engineering, whether Administrative, engineering or technical.

Goal of Value Engineering

Value engineering aims to achieve the following goals:

1. Reduce costs that do not add product value. On the one hand, reduce the number of cost vectors of value-added activities and, on the other hand, reduce the cost of adding value to achieve higher activity efficiency and add activities (Horngrenet al., 2003).
2. Improvements in product design by changing material specifications or modifying manufacturing methods (Hussein, 2008).
3. Achieve the best balance between product cost, reliability (reliability), and performance (Gongbo, 2009).
4. Reduce process, material, or product costs.
5. Maximize profits by consolidating economic unit profits and reducing costs by identifying product features for which customers are willing to pay significant amounts (Yoshikawaet al., 2002).

Stages of Applying Value Engineering

Determining the number of stages varies from one source to another and from one economic unit to another and is as follows:

• Phase 1: The previous study of value:

This stage is strategic and focuses on the necessary preparation for the study of value engineering, which aims to plan and organize the study of value by conducting many activities (Gahlan & Real Estate Management, 2018).

• Phase 2: Value Engineering Action Plan:

In order to study the value of an economic entity at each stage of its implementation, a continuous logical framework called methodology or business plan is implemented, which consists of six stages:

1. Information stage: During this phase, data is collected inside and outside the facilities relevant to the study; data sources are selected, and customer needs and product costs are determined. During this phase, the value engineering team creates a cost model (Cerqueiroet al., 2011).
2. Job analysis stage: Value engineering mainly focuses on function because function is considered the core of business in value engineering. The specialists tried to study the job in all its aspects, and the job received special attention, which led to many useful results and constructive proposals. One important means that facilitates analyzing product features is their interrelation. It is presented in the form of a functional system analysis diagram, which is defined as a functional analysis process used by value creation engineers to reduce costs in material components, large products, assembly industries, and construction projects. Positions in value engineering projects are divided into two categories: core positions and part-time positions (Borgernas & Fridh, 2004).
3. The stage of innovation and presenting ideas: This stage aims to find new ideas to complete basic functions. Value engineering team members who can think creatively, propose solutions, and develop alternatives that allow the function to be performed more efficiently and logically (cost-effectively) from an economic perspective. There are no restrictions on team members at this stage, as many methods and techniques can be used to generate new ideas and stimulate creativity, including (brainstorming, analytical methods, and innovative methods) (Rachwan, 2016).
4. Testing stage: At this stage, a serious evaluation and evaluation process takes place for all ideas presented in the previous stage (innovation and presentation stage) to approve their implementation. This means that not all ideas presented are good and applicable. This stage aims to eliminate useless ideas and identify and select ideas that have great potential to improve the quality of products and services or provide the optimal solution to the problems at hand (National Economic and Development Authority (NEDA), 2009).
5. Development stage: It is the idea development stage or the qualitative function deployment process. It is a quality improvement method that aims to improve products (or services) and ongoing processes based on problems identified in workshop reports (Dimsey & Mazur, 2003), and therefore, reports on the achievement of function, costs, and quality are considered. The target product is maximized when customer needs, competition, and design are examined (the identified feature deployment process). Customer value and working to transform their requirements into technical requirements (Borgernas & Fridh, 2004).
6. Demonstration Phase: At this stage, final recommendations are made to inform decision-makers and asset owners of the recommendations, the results achieved, and the methods used to achieve them (Abed, 2015).

• Phase 3: follow-up value research:

The goal of this phase is to finalize the value engineering work team report after ensuring that all value engineering recommendations and solutions are documented and developed in the implementation of the work plan and then to ensure that the designers work on their recommendations. They responded that they had incorporated the suggestions into the project design or rejected them (Al-Yousefi, 2010).

This phase focuses on developing an idea of the research findings, preparing a summary of the proposed and discussed alternatives, examining the scope, as well as discussing factors affecting the implementation process of the proposal or alternatives, and ongoing monitoring of the action plan (Farrell, 2010).

It should be noted that the value engineering method is a modern method of cost management implemented by an experienced and specialized work team. This method balances cost and quality to achieve the desired function. It helps increase the value of products, reduces costs, and works to meet customer desires and requirements. It is also a tool for improving processes to reduce cost, waste time, and increase the value of the product.

• Phase 4: To apply value engineering:

There are steps to apply value engineering, which are as follows (Mohamed & Mohamed, 2018):

– Step 1: (preliminary) The first step is to prepare and plan the scope.

– Step 2: Describe the information-gathering process.

– Step 3: This step involves performing functional product analysis based on basic information such as drawings, costs, and quantities.

– Step 4: Focus on generating ideas for completing the task through various alternative methods.

– Step 5: Focus on discussing and evaluating ideas or alternatives using appropriate evaluation techniques (e.g., scoring).

– Step 6: Focus on developing ideas.

– Step 7 deals with presentation and implementation.

• Phase 5: ABC method of costing based on activities (origin and definition):

This is due to the shortcomings inherent in the traditional cost accounting method in miscalculating indirect costs, the complexities that this method faces due to the diversity of indirect costs, and the need for departments to provide detailed, objective, and sufficient information. In 1987, in the United States of America, a new method was introduced known as the method. Activity-based costing (ABC). This is a new way of allocating indirect costs to an economic entity with multiple products and services (Lustsik, 2004). This method has evolved into a more informed and clearer cost hierarchy for products and services and has been shown to provide two types of outcomes for dealing with costs and unit operations. (Hijazi & Souad, 2013) The activity-based costing method relies on the causal relationship between products and the resources used to produce those products, where the costs of products are tracked according to activities based on appropriate cost policies.

The accounting literature has dealt with many definitions of the costing method based on activities. “The accounting literature has covered many definitions of the activity-based costing method. It has been defined as a method that first determines the cost of activities and then determines the cost of activities on products or services based on the consumption of the products or services for those activities” (Laneuet al., 2011). They also defined it as a method of estimating costs to provide managers with cost data for strategic and other decisions likely to affect production capacity, and thus fixed and variable costs. ABC is typically used as a supplement to the usual economic unit costing system rather than a substitute for it” (Garrison Rayet al., 2012). It has also been defined as a tool used to improve cost systems, where improvement is achieved by identifying individual activities and using them primarily to calculate the cost of a product or service (Horngrenet al., 2015).

From the above, it can be said that the activity-based costing (ABC) method is a method of recording and allocating indirect costs to units into cost items and then distributing them to the final product using cost drivers (drivers). Determining the cost of the final product will help the units make informed management decisions.

• Phase 6: Steps to apply the ABC costing method:

Applying the ABC method requires a set of sequential steps that must be followed, as follows (Drury, 2001):

1. Determine activities: The ABC method for identifying activities requires understanding all the activities of the business entity involved in producing products or services. Activities are defined as units of work or tasks described by task-related operations, e.g., B. Procurement of raw materials. It is a single activity involving many tasks, such as receiving an order. Purchasing, preparing orders, identifying suppliers, mailing orders, and tracking.
2. Allocating costs to cost centers: This step allocates the costs of resources consumed by activities individually and over a specified period. The goal is to determine the amount of costs the economic entity spends on activities so that direct material costs are directly attributed to each activity separately and without difficulties. As for indirect material costs, such as heating and lighting costs, the possibility of allocating them is not easy, as many activities are included in these costs, which requires estimating the cost drivers to allocate these costs to the activities.
3. Determine the appropriate cost drivers to allocate costs to activities: In this step, an appropriate cost engine will be determined for each activity center in order to allocate the cost to each activity center. Two basic factors must also be considered when choosing the appropriate cost engine. The first is that the cost engine explains the costs for each activity center, and the second is that the cost engine is Measurable” and easy.
4. Allocation of activity costs to products: After you determine the cost driver for each activity cost center, determine the unit cost of the driver by dividing the total cost of the activity by the number of units of the activity driver. The resulting unit cost is then determined by adding the unit costs for each engine of that particular type.

• Phase 7: Elements of designing the activity-based costing (ABC) method:

To effectively design the ABC method, several procedures must be in place that precede the design process, as follows (Garrisonet al., 2012):

1. A process carried out by management for implementation serves as an incentive for all employees to bring about change in the systems of the business entity.
2. Ensure that the human resources in the unit accept the necessity of applying the ABC method because of its importance in obtaining data and information promptly to help them carry out their various tasks in planning, control, and decision-making.
3. Linking the ABC method to performance evaluation and business entity management system strategies, such as the performance speed and quality strategy.
4. Linking the ABC method with performance evaluation and with the strategies of the company’s management system, such as b. Performance speed and quality strategy.
5. The availability of cost accounting systems that include all components of this method and can provide and communicate data and information at various levels of the economic entity to prepare periodic reports and planning budgets.
6. Form a dedicated work team to design and implement the ABC approach. The team should include representatives from all disciplines (departments) that use ABC data, including production, marketing, accounting, and engineering. It defines the goal of the method. Identify business unit impediments and obtain appropriate information to make appropriate decisions. Barriers and introduction to all financial and personnel requirements needed to implement the new approach.
7. The use of activity-based costing (ABC) requires a clear understanding of the factors that give rise to the activity, due to which the cost of this activity is incurred, and the determination of the vector cost share according to which the cost of this activity is incurred and distributed among the products.

Activity-based costing systems differ from volume-based costing systems in that they track resource consumption by activities and tie activity costs to products, services, or customers. In the first stage, factory overhead is distributed across activities or activity cost centers using appropriate resource consumption cost drivers. In the second step, activity costs or activity cost groups are assigned to the cost objects. This uses the appropriate activity cost driver to measure the order cost objects you assign to the activity. By using cost drivers in first- and second-stage cost allocations, activity-based costing systems can provide more accurate product or service cost measurements for activity costs that are disproportionate to output volume (Jeyaraj, 2015).

• Phase 8: The concept of cost reduction:

Cost reduction can be defined as a set of activities and operations carried out by an economic entity to keep the costs of its operations, products, and services as low as possible without negatively affecting functional performance and product quality so that it can meet the requirements and needs of customers, which helps the economic entity achieve advantages. Competitiveness (Al-Zamili, 2017). The concept of cost reduction means achieving real and continuous savings in the cost of the unit of the product or service provided through the use of a set of activities and processes that contribute to reducing costs without compromising efficiency, and without compromising its suitability for the required use or compromising the quality of the product or service (Abdullah & Faleh, 2018). Cost reduction is an organized, conscious, and strategic effort to reduce unnecessary material consumption, which can improve the efficiency of the economic entity’s operations, and cost reduction is the most important goal that the economic entity seeks to achieve to ensure its continuity (Bello, 2020).

• Phase 9: Principles of cost reduction:

In order for the cost reduction process to be carried out effectively and successfully, the following principles must be taken into account (Aliet al., 2018):

1. Focus on cost items that can achieve the greatest cost reduction with the least effort compared to other items.
2. Analyzing and studying costs and implementing proposals should not cost more than reducing costs.
3. Cost reduction does not lead to decreased product quality, which affects overall sales.
4. Reducing costs does not lead to poor strategic decisions, such as giving up a fixed asset that the business entity may need shortly.
5. Cost cutting should not affect or weaken morale as that would affect productivity.

• Phase 10: Motives for reducing costs:

Some motives push the unit to reduce its costs (Bragg, 2010):

1. Decreased revenues begin, and from here, the need to reduce costs begins, as the unit must monitor the prices of competing units’ products to determine the appropriate price, as increasing prices allow new competitors to enter the market easily. This results in an increase that leads to a significant decrease in the prices of these competing units, and these units suffer from a rise in the prices of their products that exceed the prices of competing products.
2. Increased fixed costs constitute a large portion of the total unit cost when using a high level of automation. High fixed costs mean the unit must operate at maximum capacity to generate profits. This is as big a problem as any unit, as high fixed costs will try to drive down product prices. Produced to ensure its survival and continuity.
3. Operations become more complex over time due to expanding the range of new products, which requires an increase in costs due to inflation, which requires the organization to control and reduce costs.

Fig. 1. The procedure is based on two stages. Source: Jeyaraj (2015).

• Phase 11: Costs are reduced using value engineering and activity-based cost engineering techniques:

Cost is considered an essential basis for achieving competitive advantage for business organizations and an important basis for organizations’ survival in the current business environment, which is characterized by changes, rapid development, and intense competition. The needs and desires of customers, as the necessary goods and services, have become more diverse, including purchasing products with different characteristics, high quality, and low price. Since obtaining a low price requires reducing the cost from the customer’s point of view, this is the case, reducing the cost, which has become one of the most important goals that companies want to achieve without compromising product specifications and maintaining the level of quality required by customers.

Research has reduced costs using value engineering and activity-based costing by eliminating wasteful applications and practices. This occurs in several areas, including material replacement. Sometimes, unnecessary or inefficient inputs are replaced with materials that perform the same function at a price. Less. Process efficiency and productivity are achieved by using the most efficient process. The product design process is being redesigned to simplify production, and efforts are being made to reduce costs and unnecessary parts. This process of elimination leads to cost overruns in the production process. Conversion and modification, i.e., developing underproduction processes and reusing many inferior or weak products to reduce costs, such as making a decorative tape for a particular product rather than purchasing one.

Costs are also reduced by applying the activity-based costing method, which is the modern concept of cost distribution and is a value-creation technique. According to this concept, reduction occurs with the need to maintain and improve the quality of basic functions. In light of this concept, work must be done to identify and exclude unnecessary costs associated with product components and functions that do not add value to the development of the current product until it is implemented in a product. New is more valuable from the perspective of the business entity and the customer.

Analysis of the Results of the Experimental Study

An Introductory Overview of the Company

Baghdad Soft Drinks Company was established as a private joint stock company with a capital of (70) million dinars to practice its main activity, which is producing and bottling soft drinks. The production and bottling of Aquafina mineral water and Yumi juices have been added. The establishment of the company was completed with the issuance of the decision of the Ministry of Commerce/Companies Registration Department No. M. No. 3315 dated 3/23/1989.

On 3/29/2021, the Companies Registration Department of the Ministry of Commerce announced in its letter No. (10641) on 1/18/2021, the completion of all legal procedures necessary for the merger of Zaki Group Company for General Trade and Food Industries Ltd. with the Baghdad Soft Drinks Company, a private joint stock company, by the provisions of Companies Law No. 21) of the year 1997 as amended. As a result of the merger, the articles of incorporation of the Baghdad Soft Drinks Company were amended, and its capital was amended to become two hundred and four billion and three hundred and thirty-five million and three hundred thirty-three thousand three hundred and thirty-three (204, 335, 333, 333) shares represent the total capital of the two merged companies.

Research Tool and Measurement Method

To achieve the research objectives and test its hypotheses, the questionnaire approach was adopted as a research tool for collecting data, given that the questionnaire is the main means of collecting data, which is defined as a group of different questions and inquiries that are interconnected in a way that achieves the goal-or goals-that the researcher seeks to achieve. A closed questionnaire was designed that included, in addition to two axes, a section containing general information about the people included in the questionnaire. The first section was devoted to revealing the integration between value engineering and cost engineering based on activities, and the second section axis included a set of questions to clarify how costs can be reduced depending on the use of the scale. The likert scale ranges from quintiles 5 “strongly agree” 1 “strongly disagree.” At the same time, 3 expresses the neutrality of the scale.

The Place of Research

The opinions of department heads and a sample of public administration employees, production departments, and workers at the Baghdad Soft Drinks Company were surveyed because industrial activity represents a fertile environment for applying industrial technologies, and there is an urgent need to develop their production further. Production capabilities were reviewed in light of the country’s many economic challenges, especially the Intense competition with foreign products and low costs, as well as administrative reality. Thirty valid questionnaires were collected for analysis after excluding invalid questionnaires.

Study Tool

To answer the study’s questions and hypotheses, the researchers created a questionnaire consisting of two axes: the first axis dealt with the variable of integration between value engineering technology and activity-based costing, and the second axis dealt with the discount cost variable.

Testing the Stability of the Scale

Reliability means that the questionnaire is consistent and does not contradict itself. This means we will get a result when we apply it again to the same sample. The researcher calculated the reliability of the questionnaire using Cornbrash’s alpha coefficient.

Cornbrash’s Alpha Coefficient

To measure the stability of the study tool (questionnaire), the researcher used the Cornbrash alpha equation to ensure the stability of the study tool for the exploratory sample of 30 excluded from the total sample. Table I shows the reliability coefficients of the study instrument.

Table I. Reliability Coefficients for the Study Measures According to Cornbrash’s Alpha Method

Variables	Number of questions	Alpha coefficient
The first axis: Integration between value engineering technology and activity-based costing	10	0.929
The second axis: Reducing costs	10	0.928
Total	20	0.966

It is clear from the table above that the general reliability coefficient values for the study’s axes are high, reaching (0.966) for the entire questionnaire’s (20) items, while the degree of reliability of the first axis reached (0.929), while the level of reliability of the second axis reached (0.928). This indicates that the questionnaire has a high level of reliability that can be relied upon in the field application of the study, according to the Nonley scale that was adopted (0.7) as a minimum reliability level.

Analysis of the Questionnaire Items

Analysis of the Paragraphs of the First Axis: Integration between Value Engineering Technology and Activity-based Costing

The researchers calculated the arithmetic mean, standard deviation, and relative weight of the sample members’ responses to the questionnaire on the axis of integration between value and cost techniques based on activity, as shown in Table II.

Table II. Means and Deviations for Respondents to Questions Related to the First Axis Integration between Value Engineering Technology and Activity-based Costing

The hub	Number of paragraphs	Average	Standard deviation	Relative weight	Results
Integration of value engineering technology and activity-based costing	10	4.333	0.636	86.667	Agree

From Table II it is clear that the estimated degree of the integration axis between value engineering technology and cost is based on activity from the point of view of the sample members, as it received a relative weight of (86.667) in complete agreement.

For further results, the researchers examined each paragraph separately. The researchers calculated the arithmetic means, standard deviations, relative weights, and rankings for each paragraph of the integration axis between value and cost engineering technology based on activity, as in Table III.

Table III. Means and Deviations for Respondents to Questions Related to the First Axis: Integration between Value Engineering Technology and Activity-based Costing

Sequence	The first axis/integration between value engineering technology and activity-based costing	Average	Standard deviation	Relative weight	Ranking	Result
1	The economic unit determines the design of the product based on the functional service it will provide to the user.	4.500	0.630	90.000	1	Totally agree
2	The functions and requirements of the product are determined after studying the needs and desires of the customer, taking into account the cost of the product and its suitability for the customer.	4.233	0.971	84.667	6	Totally agree
3	The economic entity seeks to reduce the cost of manufacturing the product to the lowest possible level while maintaining the required quality by integrating the two technologies.	4.433	0.626	88.667	4	Totally agree
4	When producing its products, the economic entity wants to obtain raw materials at the lowest cost and with the best performance and direct these materials to the parts of the product that need them.	4.233	0.971	84.667	7	Totally agree
5	The economic entity uses available resources economically and rationally by reducing costs and eliminating activities that do not add value.	4.467	0.629	89.333	2	Totally agree
6	An economic entity uses research and development to modernize its operations to offer products at the lowest cost and offer preferred alternatives suggested through value engineering.	4.200	0.961	84.000	9	Totally agree
7	An economic entity uses different creative options when designing its products.	4.467	0.629	89.333	3	Totally agree
8	The economic entity’s goal is to reduce incorrect production through fair distribution and minimization of energy consumption.	4.233	0.971	84.667	8	Totally agree
9	The economic entity plans to work on eliminating unqualified workers and getting rid of unnecessary equipment and devices.	4.367	0.615	87.333	5	Totally agree
10	All ideas presented in the previous stages to improve product quality are evaluated and developed based on the reports received. The desired functionality, quality and costs are then considered, and final proposals are presented.	4.200	0.961	84.000	10	Totally agree

Table III shows that the scores for the elements of the first axis, integration between value engineering technology and activity-based costing, ranged between (90–84), from strongly agree to agree.

1. Paragraph No. (1) was ranked first with a mathematical average of (4.500) and a relative weight of (90), where I obtained a result that completely agreed.
2. Paragraph No. (2) ranked sixth with an arithmetic average (4.233) and a relative weight (84.667), where I obtained a result that completely agreed.
3. Paragraph No. (3) was ranked fourth, with a mathematical average of (4.433) and a relative weight of (88.667), where it obtained a result that completely agreed.
4. Paragraph No. (4) ranked seventh with an arithmetic mean (4.233) and a relative weight (84.667), where it obtained a result that completely agreed.
5. Paragraph No. (5) ranked second with an arithmetic mean (4.467) and a relative weight (89.333), where it obtained a result that completely agreed.
6. Paragraph No. (6) ranked ninth with an arithmetic average of (4.2) and a relative weight of (84), where it obtained an agreed result.
7. Paragraph No. (7) ranked third with an arithmetic mean (4.467) and a relative weight (89.333), where it obtained a result that completely agreed.
8. Paragraph No. (8) ranked eighth with an arithmetic mean (4.233) and a relative weight (84.667), where it obtained a result that completely agreed.
9. Paragraph No. (9) ranked fifth with an arithmetic mean (4367) and a relative weight (87.333), where it obtained a result that completely agreed.
10. Paragraph No. (10) ranked tenth with an arithmetic average of (4.2) and a relative weight of (84), where it obtained an agreed result.

Analysis of the Paragraphs of the Second Axis: Reducing Costs

The researchers calculated the arithmetic mean, standard deviation, and relative weight of the sample members’ responses to the cost reduction axis questionnaire, as in Table IV.

Table IV. Means and Deviations for Respondents to Questions Related to the Second Axis: Cost Reduction

The hub	Number of paragraphs	Average	Standard deviation	Relative weight	The result
Reduce costs	10	4.327	0.642	86.533	Totally agree

It is clear from Table IV that from the respondents’ perspective, the estimated score for the cost reduction axis received a relative weight of (86.533), that is, complete agreement.

For further results, the researcher studied each paragraph separately and calculated the arithmetic means, standard deviations, relative weights, and classifications for each paragraph of the cost reduction axis, as in Table V.

Table V. Means and Deviations for Respondents to Questions Related to the Second Axis: Cost Reduction

Sequence	The second axis: reducing costs	Average	Standard deviation	Relative weight	Ranking	Result
1	Using an activity-based costing approach to allocate indirect costs and value engineering requirements creates appropriate information for product cost reduction.	4.467	0.629	89.333	2	Totally agree
2	Activity-based costing and value engineering eliminates costs for activities that do not add value to the product, resulting in lower product costs.	4.200	0.961	84.000	8	I agree
3	One of the most important ways to reduce indirect costs is to know their behavior and the activities that generate their costs.	4.500	0.630	90.000	1	Totally agree
4	The activity-based costing approach is appropriate for allocating and reducing industrial indirect costs.	4.267	0.980	85.333	6	Totally agree
5	Using activity-based costing and value engineering approaches to implement a continuous improvement system policy reduces costs.	4.433	0.626	88.667	4	Totally agree
6	Using an activity-based costing approach overcomes the shortcomings of traditional product cost measurement systems.	4.233	1.006	84.667	7	Totally agree
7	The activity-based costing approach is important in economic entities where indirect manufacturing costs represent a significant portion of total unit costs.	4.367	0.615	87.333	5	Totally agree
8	The activity-based costing approach provides cost information that reflects the diversity of products using the available resources, thus meeting management needs regarding pricing and production.	4.167	0.986	83.333	9	I agree
9	Activity-based costing and value engineering help analyze the value of processes, identify activity centers and choose cost drivers, contributing to quality-level development.	4.467	0.629	89.333	3	Totally agree
10	Using an activity-based costing approach results in an optimal allocation of indirect costs to achieve accurate cost information per unit produced.	4.167	0.986	83.333	10	I agree

It is clear from Table V that the ratings for the items of the second axis, cost reduction, ranged between (90–83.333), from completely agree to agree.

1. Paragraph No. (1) ranked second with a mathematical average (4.467) and a relative weight (89.333), where it obtained a result that completely agreed.
2. Paragraph No. (2) ranked eighth with an arithmetic average of (4.2) and a relative weight of (84), where it obtained an agreed result.
3. Paragraph No. (3) ranked first with an arithmetical average (4.500) and a relative weight (90), where I obtained a result that completely agreed.
4. Paragraph No. (4) ranked sixth with an arithmetic mean (4.267) and a relative weight (85.333), where it obtained a result that completely agreed.
5. Paragraph No. (5) ranked fourth with a mathematical average (4.433) and a relative weight (88.667), where it obtained a result that completely agreed.
6. Paragraph No. (6) ranked seventh with an arithmetic average (4.233) and a relative weight (84.667), where it obtained a result that completely agreed.
7. Paragraph No. (7) ranked fifth with an arithmetic mean (4.367) and a relative weight (87.333), where it obtained a result that completely agreed.
8. Paragraph No. (8) ranked ninth with an arithmetic mean (4.167) and a relative weight (83.333), where it obtained an agreed result.
9. Paragraph No. (9) ranked third with an arithmetic mean (4.467) and a relative weight (89.333), where it obtained a result that completely agreed.
10. Paragraph No. (10) ranked tenth with an arithmetic average (4.167) and a relative weight (83.333), where it obtained an agreed result.

Data Analysis and Hypothesis Testing

This section focused on presenting and analyzing the statistical results obtained by answering the study’s hypotheses, which aim to determine the role of integration between value engineering technology and activity-based costing in reducing cost.

Hypothesis testing

Results for Testing the First Hypothesis (A Significant Relationship Exists between Integration between Value Engineering Technology and Activity-based Costing and Cost Reduction)

Testing the correlation between the independent variable (integration between value engineering technology and activity-based costing) and the dependent variable (cost reduction), as in Table VI.

Table VI. Results of Testing the Correlation between the Independent Variable and the Dependent Variable

Variables	Integration of value engineering technology and activity-based costing	Reduce costs
Integration of value engineering technology and activity-based costing	1.000	0.992**
Reduce costs	0.992**	1.000

From Table VI it is clear that the correlation coefficient between the independent variable (integration between value engineering technology and activity-based costing) and the dependent variable (cost reduction) is statistically significant at the significance level (0.01), and this indicates the existence of a direct and strong correlation between the independent variable and the variable. Dependent means that the greater the integration between value engineering technology and activity-based costing, the greater the cost reduction.

Results for Testing the Second Hypothesis (There is a Significant Effect of the Integration between Value Engineering Technology and Activity-based Costing on Cost Reduction)

To test this hypothesis, a simple linear regression was used to determine the effect of the independent variable” (integration between value engineering techniques and activity-based costing) on the dependent variable (cost reduction).

The results in Table VII shows the significance of the model based on the statistical analysis results, where the value of (Sig.) (F-statistic) is less than (0.05) and is (0.000), indicating that the model is suitable for testing and the results are reliable. The value of (Durbin-Watson) reaches (2.012), which is greater than the value of (R-squared), which reaches (99%). This explains the lack of autocorrelation and spurious regression. The value of (R-squared) is (0.985), which means that the explanatory power of the independent variables and mediating variables is 99%. The (adjusted R-squared) value is (0.985), which means that the independent variable contributes 99% to the intermediate variable. The rest (1%) is caused by other factors outside the model, in addition to random errors caused by sample testing accuracy, measurement unit accuracy, etc.

Table VII. Simple Linear Regression Results

Variables	B	T	Sig.
Fixed limit	0.009−	0.089−	0.929
Integration of value engineering technology and activity-based costing	1.001	42.930	0.000
Test value (F)	1843.025	Probability value	0.000
The coefficient of determination(R2)	.985	Modified coefficient of determination (R2)	.985
Durbin-Watson		2.012

Interpretation of the Hypothesis Result

The results of the statistical analysis show that the value (sig.) of the independent variable, the integration between the value engineering technique and activity-based costing, is less than (0.05), reaching (0.000), which indicates that there is a significant effect of the integration between the value engineering technique and activity-based costing on reducing costs.

The simple linear regression equation can be represented as follows:

Y=−0.009+1.001×1where Y is reducing costs, ×1 is integration between value engineering technology and activity-based costing.

It is clear from analyzing the research results and testing the first hypothesis that there is a direct correlation between the integration variable between value engineering and its dimensions and the means it provides for reducing costs, excluding activities that do not add value, Increasing spending on value-added activities and activity costs plays an important role in streamlining and reducing costs. Costs, especially indirect industrial costs, are distributed equitably; the dependent variable is cost reduction. The greater the integration between two technologies, the greater the interaction and its impact on cost reduction. There is a statistically significant correlation between the two variables at a significant level (0.01). Regarding the second hypothesis, it was demonstrated that the integration of value engineering techniques with ABC has a significant impact on cost reduction through the use of value engineering requirements and ABC steps and their cost reduction considerations for the economy under study. Influence. Entities that help achieve research objectives and develop solutions to problems.

Conclusions

1. Baghdad Soft Drinks Company relies on traditional cost accounting methods to measure the cost of its products, which makes it unable to keep pace with the development of the business environment.
2. In addition to using traditional cost accounting methods, the company’s employees are not familiar with modern cost accounting methods such as activity-based costing and value engineering and cannot provide sufficient information about the cost of the product.
3. Lack of interest in research and development activities, the design process, and the inability to provide research to develop the company’s products.
4. The lack of protection for local products and the dumping of imported products in the local market makes it impossible for factories to sell their products in the local market at a price that covers production costs.
5. The presence of unused and unused energy sources in the company negatively affects the company’s performance, not least because it bears the costs of these energies.

Recommendations

It is appropriate for Baghdad Soft Drinks Company to adopt modern cost management methods such as activity-based costing and value engineering, which play an important role in correctly determining the cost of its products. The company’s management is urging to develop and modernize the cost system used in the company, as it has become ineffective in the modern industrial environment. It makes sense to develop the company’s human resources further, especially in the cost department, by conducting introductory courses in cost accounting, especially after learning activity-based costing and value engineering methods. The company’s participation in the research and development department is to provide research work to develop the company’s products, as well as involve employees in scientific conferences or training on the latest developments in the field of research and development. Apply activity-based costing and value engineering and strive to gain survival and adaptability skills to help you plan future developments within the business environment.