Measuring waste costs in the food sector using material flow cost accounting approach: An application in Iraq dairy industry

In the increasing global competition environment, businesses are looking to reduce costs and increase profits. Material Flow Cost Accounting (MFCA), which can be one of the approaches that can respond to this search, represents an innovative accounting approach that focuses on reducing environmental impact and promoting sustainable development. This method aims to increase production efficiency and provide a competitive advantage to businesses by reducing production waste. In this study, MFCA application possibilities were examined in a dairy products production company operating in the Iraqi food sector to improve financial and environmental performance by measuring waste costs and determining production processes. A material flow model was created from the beginning of the product to final consumption in order to determine waste points and track material flows physically and financially. The resulting product and losses were calculated as a result of the application. Product and production loss costs were determined, and losses were reported on a variety, quantity, and quantity center basis. The case study method was used in the study. As a result of the application, it was observed that the waste generated during the production process was greater than the waste already determined by the company. In addition, it was determined that water usage and labor time were higher than the planned standards. It was determined that the highest waste in the company was in bottles, with 14%. The results obtained revealed that businesses have the opportunity to improve both economic performance and environmental management by applying MFCA.