Global Journal of Management and Business Research, B: Economics and Commerce, Volume 21 Issue 5

III. C ase S tudy In the following test, in order to simplify the demonstration, we will assume the existence of two tariff groups, as in Table 4, associated with two cost objects and respective tariff modalities. To simplify further, there will be no changes in the structure, keeping the tariff modalities for the next period, without additions or exclusions. We have two different moments: year A0 (year of start) and year A1 (year to be rebalanced). After evaluating the current equilibrium level, the goal is to find a new ceiling price for tariffs in the A1 period, at a new equilibrium level. The costing method, for tariff purposes, was discussed in Technical Note No. 64/2017/GRP/SRG (ANTAQ, 2017c) and Technical Note No. 50/2017/ GRP/SRG (ANTAQ, 2017b). It is a kind of Integral (full) Absorption Costing. However, Activity-Based Costing (ABC) method is also allowed, as a form of management improvement. Absorption Costing is simple, suitable for mid- sized companies and provides a lot of information. It's a cost method that includes all manufacturing costs - direct materials, direct labour, and both variable and fixed overhead (indirect costs) - in unit product cost. Integral costing method is a principle whereby fixed as well as variable costs are allocated to the cost unit. On the other hand, absorption costing involves the appointment of overhead, which can be subjective. The resulting information can be misleading for management decision-making. ANTAQ defends that the “main merit of the Integral Costing Method is the fact that all expenses incurred in an organization are taken into account, without exceptions. In it, we have the total recovery of all company expenses for the delivery of a given cost object. This results in more complete unit cost information. However, it differs from the conventional Absorption Method, as even the No-product cost (expenses, selling, administrative, lawyers, for example) are allocated to cost centers (or cost objects) - however, it has a very similar logic to that.” Using this method, costs that are assigned to cost objects can be divided into two categories: direct cost and indirect costs. Direct costs are those costs that can be specifically and exclusively identified with a particular cost object. In contrast, indirect cost cannot be exclusively with a given cost object. ANTAQ mapped Nine Cost Objects for Brazilian port authorities, and transposes these objects into the tariff structure, because they are intimately connected with the tariff tables. Objects are the aggregation of different tariff modalities that have a high degree of affinity with each other regarding the products supplied or of type of users. In the Integral Costing Method, the product offered by the company is responsible for absorbing all charges. Indirect costs must be allocated to the costing objects using apportionment criteria. ANTAQ assumes that there should be a proportional relationship between type of cost and the costing objects (indirect costs should be smaller compared to direct costs, for example). The apportionment is carried out using indices that will direct the distribution of the Indirect Cost (and General Expenses) to the cost objects. Then, the percentage that the products consume of the adopted index is estimated. They then settle the overhead based on that percentage. All expenses related to the production and delivery effort are, therefore, distributed to all products or services offered. To reduce the arbitrariness of the Costing Method, there must be a cause and effect relationship between the distribution parameter and the volume of indirect cost. The variations that determine how the entity's resources are used by the costing objects must also be identified. The hypothetical apportionment percentages to be used (both for the preceding and subsequent periods) in the case study are in Table 5: Table 5: Costing Percentages % of Indirect Costs % of Expenses Cost Objects Tariff group Labour 3rd Party Services Materials Other Costs Labour Utilities 3rd Party Services Miscellaneous Rent Marketing Depreciation & amortization Maritime Infrastructure I 82 82 82 95 82 82 82 95 65 95 65 Docking Infrastructure II 18 18 18 5 18 18 18 5 35 5 35 Consider the following accounting statement for the preceding period, following the chat account in the ANTAQ Manual of Accounting (ANTAQ, 2017a) (Table 6): A Practical Tariff Methodology for Port Authorities © 2021 Global Journals 18 Global Journal of Management and Business Research Volume XXI Issue V Version I Year 2021 ( ) B