Idle Costs in the Pandemic

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Author(s): Liliane Cristina Segura (Universidade Presbiteriana Mackenzie, Brazil), Fernando Nascimento Zatta (Universidade Presbiteriana Mackenzie, Brazil), Henrique Formigoni (Universidade Presbiteriana Mackenzie, Brazil)and Wellington Gonçalves (Universidade Federal do Espirito Santo, Brazil)
Copyright: 2021
Pages: 15
Source title: Handbook of Research on Financial Management During Economic Downturn and Recovery
Source Author(s)/Editor(s): Nuno Miguel Teixeira (Center for Research in Business and Administration, School of Business Sciences, Polytechnic Institute of Setúbal, Portugal)and Inês Lisboa (CARME, School of Management and Technology, Polytechnic of Leiria, Portugal)
DOI: 10.4018/978-1-7998-6643-5.ch012

Keywords: Accounting and Finance / Business & Management / Business Science Reference / Economics & Economic Theory

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Abstract

This chapter focuses on a crucial crisis issue with consequences that have affected many companies worldwide, the spread of the COVID-19 pandemic. Deliveries were cancelled, and many companies closed their facilities completely around the world. Taking into account the capacity and structural nature of fixed costs, activity-based cost estimation may be more appropriate than traditional cost estimation to create the capacity to manage production cost structures to eliminate possibilities for idle costs, as these are a function of using the capacity offered to the installation. This chapter theoretically presents the relationship between the main costs of idleness, crisis, and profitability as a measure of the company's value. This is important, as the company's value can be delayed by the occurrence of a crisis, and the health pandemic has created a field emerging from research with advances in strategic cost management.

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Idle Costs in the Pandemic

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