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A Study Of The Stickiness Of Cost Of Goods Sold And Operating Costs To Changes In Sales Level In Iran

Author

Listed:
  • NASSIRZADEH Farzaneh

    (Ferdowsi University of Mashhad, Mashhad, Iran)

  • SAEI Mohammad Javad

    (Ferdowsi University of Mashhad, Mashhad, Iran)

  • SALEHI Mahdi

    (Ferdowsi University of Mashhad, Mashhad, Iran)

  • BAYEGI Sayyed Ali Haddad

    (Ferdowsi University of Mashhad, Mashhad, Iran)

Abstract

Increased competition in domestic and foreign markets has made managers to identify their costs structure and behavior better. Cost behavior is a model based on which costs response to changes in level of activity. Having invented stickiness of costs model by Anderson and Janakiraman (2003), managers are able to better predict costs behavior when increases and decreases are occurred in sales. Using above model, this research examines behavior of cost of goods sold as well as general, administrative and selling costs and studies the degree of stickiness of these costs given to decreased sales in past year and the ratio of total assets to sales. Statistical universe of the research is listed companies in Tehran Stock Exchange for a period of 10 years (2001-2010). The results indicate that cost of goods sales isn’t sticky to changes in sales however general, administrative and selling costs (SG&A costs) increase by 0.443% when there is 1% increase in sales level while 1% decrease leads to 0.261% reduction. The results also indicate that stickiness degree of SG&A costs is lower in periods previous which decreased sales were occurred and the ratio of total assets to sales as a factor of companies’ size does not effect on stickiness degree of these costs.

Suggested Citation

  • NASSIRZADEH Farzaneh & SAEI Mohammad Javad & SALEHI Mahdi & BAYEGI Sayyed Ali Haddad, 2013. "A Study Of The Stickiness Of Cost Of Goods Sold And Operating Costs To Changes In Sales Level In Iran," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 8(2), pages 79-89, August.
    • Handle: RePEc:blg:journl:v:8:y:2013:i:2:p:79-89
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    References listed on IDEAS

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    1. Otavio Ribeiro De Medeiros & Patricia de Souza Costa, 2004. "Cost Stickiness in Brazilian Firms," Finance 0412021, University Library of Munich, Germany.
    2. Mark C. Anderson & Rajiv D. Banker & Surya N. Janakiraman, 2003. "Are Selling, General, and Administrative Costs “Sticky”?," Journal of Accounting Research, Wiley Blackwell, vol. 41(1), pages 47-63, March.
    3. Sanjay Kallapur & Leslie Eldenburg, 2005. "Uncertainty, Real Options, and Cost Behavior: Evidence from Washington State Hospitals," Journal of Accounting Research, Wiley Blackwell, vol. 43(5), pages 735-752, December.
    4. Noreen, Eric & Noreen, Eric & Soderstrom, Naomi, 1994. "Are overhead costs strictly proportional to activity? : Evidence from hospital departments," Journal of Accounting and Economics, Elsevier, vol. 17(1-2), pages 255-278, January.
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    Cited by:

    1. Orhan Bozkurt & Sukru Dokur & Adem Yildirim, 2014. "The Importance of Cost Calculation Method in the Accounting and Management of Turkish Operating Costs. A Research within the Scope of TAS-2," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(2), pages 38-46, April.
    2. repec:hur:ijaraf:v:4:y:2014:i:2:p:42-50 is not listed on IDEAS

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