COST MANAGEMENT IN CONDITIONS OF ECONOMIC INSTABILITY: ADAPTING ACCOUNTING APPROACHES

Abstract

This article explores the adaptation of cost management accounting approaches in the face of economic instability. The study emphasizes the critical need for businesses to respond to rapid and unpredictable changes in the external environment, such as inflation, currency fluctuations, and global supply chain disruptions. The article analyzes the traditional methods of management cost accounting, provides their characteristics, highlights the problematic aspects of their use in times of crises and uncertainty, in particular, insufficient flexibility and ability to respond promptly to changes, and identifies the types of costs that have a key impact on the formation of the results of an entity's activities. The research focuses on the use of flexible budgeting, Activity-Based Costing (ABC), and Zero-Based Budgeting (ZBB) as key approaches to optimize cost management during crises. These methods provide companies with tools to adjust financial plans, precisely allocate costs, and rigorously justify expenses. The research employs a theoretical analysis, evaluating how flexible budgeting can help enterprises swiftly adjust their financial plans based on market changes, how Activity-Based Costing enables more accurate cost allocation to essential activities, and how Zero-Based Budgeting ensures a disciplined approach to cost control by justifying all expenses from zero. The research also examines the role of digital technologies and automation in modern cost management and the need to use data analytics, artificial intelligence (AI) and machine learning (ML) to improve financial forecasting and management decision-making processes. The results demonstrate that modern accounting techniques significantly enhance the ability of businesses to manage costs efficiently, maintain financial stability, and remain competitive in challenging economic environments. The practical value of this research lies in offering actionable recommendations for businesses to implement these modern cost management strategies. This allows companies to better adapt to crises, optimize resource allocation, and improve financial decision-making, ultimately ensuring long-term sustainability.