Cost object determination training to support Go-Barber business innovation in Malang City

In order to save small business owners, accounting is one of the spearheads that plays a role in maintaining cost eﬃ ciency so that service prices can still compete with similar businesses, reducing waste (improvident). Innovation from permanent barber to Go-Barber is should be accompanied by a change in the method of determining the cost object in determining activity cost rates, with additional considerations for measuring services that generally have to pay attention to distance to customers, so that it has an impact on the emergence of variable costs as a basis determine the price of the service. The circle method is considered the right method because it is based on the characteristics of innovation that eﬀ orts to innovate will certainly not stop at a certain point, but will continue to evaluate and innovate in response to developments in the business environment. Measurement of the cost object is needed to determine the price of the service based on the basic tariﬀ which will be multiplied by the activity. Identiﬁ cation of the right cost object will provide accuracy in determining the Cost of Goods Sold (COGS) which is of course a method in determining the price of services. Based on the results of training from business actors carried out by instructors/ presenters, that participants understand enough about how to identify and analyze activity costs to determine the selling price of Go-Barber services where previously there was no calculation method applied by Go-Barber.


INTRODUCTION
Malang as an education city with approximately 50 universities, both public and private, contributes to the economic development of the community and at the same time makes Malang City a very potential market for Micro, Small and Medium Enterprises (MSMEs). Not limited to culinary, fashion products, scientifi c reference books and stationery that can be provided by SMEs, but also other services, such as barber shops also have great potential to live and develop. This is because Malang has 3 main areas of economic development (three core areas of economic development), namely education, manufacturing, and services.
The MSME has a strategic role in creating both jobs and encouraging new businesses (start-up businesses). Therefore, it is undeniable that maintaining sustainability of MSMEs is a major issue in the fi eld of world economic development, this is because MSMEs are also a driving force in increasing the gross domestic product (GDP) in a country. However, as pointed out by Kot (2018), that several studies show that the sustainability and resilience of MSMEs is continuously at risk. This is because there are still many obstacles faced by most business actors, such as lack of capital, skills, and limited technology, which actually creates poor competitiveness. (Maksum, Sri Rahayu, & Kusumawardhani, 2020).
Therefore, business sustainability is determined by the ability of MSME themselves to maintain a continuous innovation process as a core factor towards successful long-term business performance. Innovation can be defi ned as the eff orts business entities to create economic value for customers by positively increasing the gap between the value received or perceived by customers and the economic costs incurred by the business entity. So that by creating a positive gap, business actors can create greater economic value than their marginal competitors in the market. Finally, entrepreneurs will have a competitive advantage when innovation is able to become a source of competitive advantage (Hamdani & Wirawan, 2012).
The innovation process is intended to achieve the expected results, such as increasing the competitiveness of a business entity, which implies an increasing demand of credible and timely information in a business process. That is, in context, the development of an adequate costing system is very important as a means of innovation. In addition, proper management of resources and proper cost control are also required to achieve effi cient and eff ective management. (Quesado & Silva, 2021). Alkhajeh dan Khalid (2018) argues that management accounting practices have an impact on the performance of MSMEs, which can lead to increasing productivity. According to Maziriri and Mapuranga (2017), it is proven that various MSMEs in South Africa that practice management accounting properly will have good implications for costing, budgeting, performance evaluation to strategic analysis for business decision making. Using the Spearman's rank of the correlation coeffi cient, it stated that there is an associative relationship between management accounting practices and MSME performance. The test results show that there is a signifi cant positive relationship between costing, budgeting and performance measurement techniques to increase operating profi t. On the other hand, a signifi cantly weaker positive relationship was found between the use of management accounting techniques on decision making for increasing operating profi t. In conclusion, it provides an explanation that there is a positive relationship between management accounting practices and the performance of MSMEs represented by operating profi ts. Furthermore, Msomi, Ngibe, & Bingwa (2020) identifi ed that although MSME actors are currently very aware of the strategic impact and benefi ts of integrating management accounting practices in their business processes as an innovative strategy to achieve sustainability. In general, because of the economic challenges associated with how to integrate their business strategies into more automated (digitalized) management accounting, MSMEs basically prefer traditional management accounting which identifi es cost information for effi ciency purposes. However, modern automated accounting practices strongly support the achievement of innovation goals more effi ciently.
Accounting cost provides key information for managers (business owners) to plan and control in order to achieve the success of organizational goals (Horngren, 2012). Activity Based Cost Method is a modern cost accounting as well as a contemporary management accounting system that focuses on | 623 | Cost object determina on training to support Go-Barber business innova on in Malang City Putu Indrajaya Lembut, Fitri Oktariani, Yuswanto Yuswanto measuring activity-based cost objects, assigning costs, to creating value for customers. (Krumwiede & Roth, 1997). Information about activities that give rise to costs may be referred to as "cost objects". The cost object is needed by business actors to determine the selling price of services and profi t targets as well as the basis for determining strategies and adjusting business processes based on environmental changes. The ability of business actors to consider and determine irrelevant activities is a "waste" of cost and time and even has an impact on diverting attention to things (activities) that can actually lead to "fi nancial diffi culties". (Geiger & Ittner, 1996).
Cost classifi cation according to (Horngren et al., 2009:54) is divided into direct costs and indirect costs. Direct costs are associated with a specifi c cost object and can be traced to the cost object in an economically feasible and relevant way (cost effi ciency). Cost tracing is performed to assign costs directly to a specifi c cost object. Indirect costs are associated with a specifi c cost object but cannot be traced to that cost object. The assignment of indirect costs to cost objects can be demonstrated by performing cost allocations.
Likewise, regarding the allocation of costs in the Go-Barber business, it can also be classifi ed into direct costs and indirect costs, so it is expected to provide a guarantee for the survival and growth of the relatively new Go-Barber business. This means that innovation from traditional barber to modern barber (Go-Barber) must also occur in parallel along with changes in cost-related accounting methods, from traditional accounting to modern activity-based accounting.
The issue of the risk of susceptibility to MSME business continuity was also broadly seen at the time before the Covid-19 pandemic occurred, various MSMEs became economic drivers. This is shown in 2019, MSMEs in Indonesia turned out to be a very important economic backbone. The structure of the Indonesian economy shows that around 99% of the company's profi le consists of the MSME sector. This sector also absorbs about 97% of the total workforce in the economic sector (Hidayati & Rachman, 2021). However, after the Covid-19 pandemic which had a negative impact on economic growth in all countries in the world, with a global economic loss of 12 trillion US dollars or the equivalent of 168,000 trillion in Indonesian Rupiahs. Not a few MSMEs are not able to maintain their business continuity due to economic pressures. As shown in table 1, of the total MSME entrepreneurs in Indonesia, there are 65,465,497 entrepreneurs (Hidayat et al., 2021), There are at least four impacted factors that aff ect the performance of MSMEs in Indonesia as shown in Table 1. This makes MSMEs "forced" to adapt by making innovations by utilizing information technology facilities in order to be able to face the demands of an increasingly modern environment. It can be exemplifi ed related to the barber shop business, for example if consumers want to get a haircut at a barber shop, then they will go to the barber shop place/location fi rst in order to get haircut services. However, with the development of information technology, these lifestyles are rapidly changing, so that currently many people want the services of a hair stylist so that they can be obtained at the consumer's residence. Of course, by taking advantage of advances in information technology, which can get contacts from barbers and contact them more easily through applications on social media. The change from the type of haircut service that used to be in the studio to the type of service that can be obtained without the consumer having to travel (the barber who will come to the customer's residence) is called "Go-Barber".
This type of Go-Barber service does indeed answer the challenges of the times in terms of information technology. But it turns out that it also creates other problems in determining the price of haircut services which are often not easy to determine. This is because if the pricing is too high, then customers can choose other Go-Barbers (competitors) with more aff ordable prices with the same facilities. This means that price determination will be an important calculation for Go-Barber to be able to determine standard prices, both for consumers and for Go-Barber itself. In addition, the determination of service prices can also be used as a benchmark for Go-Baber to determine profi ts that can be used to develop service models for consumers. This is where accounting has an important role to support innovation by reassessing the cost object for determining the cost of Go-Barber services.
Costing is no longer compatible with the old, passive service model. This means that activities that no longer require a place (permanent buildings) have contributed greatly to changes in costs that will have an impact on service pricing. The problem of determining this cost is considered very serious, because it will be used as a basis in determining the Cost of Goods Sold (COGS) of services charged to consumers. Consequently, if the cost determination is not accurate, the cost will be high which will actually carry the risk of Go-Barber's business losing its customers. On the other hand, if the price charged to the customer is too low, then the Go-Barber business actor will actually suff er a loss, so they cannot maintain their business in the future, which results in this innovation not providing economic benefi ts to the Go-Barber business actor.
Based on a survey that has been carried out by author to 32 barber shop owners in Greater Malang this time, the main problem faced by partners is that previously, the barber shop business set service prices between Rp. 10,000 to Rp. 150,000, then after switching to Go-Barber, these business owners do not yet understand how to determine the price of a new service which is certainly diff erent from the previous one. To answer partner problems, the focus of training and mentoring is: (1) providing understanding and skills in determining cost target-setting activities, namely tracking various activities that trigger costs, which of course can aff ect the amount of profi t earned (Pavlatos & Kostakis, 2021). Business owners must pay attention to the fl ow of costs that arise through information on activities that occur, as well as control to achieve cost effi ciency, for example by making decisions from various information about these activities whether they provide benefi ts to customers or not (Ismail, Meutia, & Ummi, 2019), (2) Conversion capability, which is the transformation of the type of activity that occurs into the amount of cost-triggers based on Activity Based Cost (ABC) to be re-charged to the relevant activities, in addition to being a basis for controlling costs, as well as for the formation of COGS (Al-Dhubaibi, 2021).
The general purpose of this service is to open up the limitations of MSMEs, especially when owners are dealing with market pressures due to the Covid-19 phenomenon which requires innovation wherever possible from the old (traditional) way to the modern way. As stated by Ahn, Minshall, & Mortara (2015), that by opening up the limitations of MSMEs, owners will be able to access various resources, for example increasing the assets needed to improve their capacity in carrying out the innovation process to increase the market. Meanwhile, the specifi c purpose of this service is in addition to providing knowledge to | 625 | Cost object determina on training to support Go-Barber business innova on in Malang City

Putu Indrajaya Lembut, Fitri Oktariani, Yuswanto Yuswanto
Go-Barber business actors in identifying various activities when they have to go to consumers (doorto-door), also providing skills to determine the price of new services based on COGS to be charged to consumers. This service also provides benefi ts for MSME owners, especially for Go-Barber business owners, as follows: (1) Owners have the understanding to observe past activities to measure the costs incurred from the activities they have done, and are able to plan activities related to improving service in the future more effi ciently so that the selling price can be estimated in the right way.
(2) Barber business actors have skills in calculating or estimating operating profi t. (3) Barber business actors are able to not only maintain their business in the midst of the changing business environment due to the pandemic, but are able to compete by continuously innovating based on various service activities to consumers.

Activity Methods
This training method emphasize the problems that occur and goals that need to be reached by partners. The goal is to give partners knowledge and understanding on how to determine relevant activities in the Go-Barber business so that the selling price of services (COGS) could be set. The circle method is considered the best method because it is based on the characteristics of innovation that eff orts to innovate will certainly not stop at a certain point, but will continue to evaluate and innovate in response to developing the business environment. The circle method is described in Figure 1, as follows:

Schedule
The implementation of the service program for barber shop business actors is divided into two sessions. The fi rst session with the topic of exploring problems and introducing accounting (stages 1 and 2). This session was conducted with a limited face-to-face meeting which was attended by several business actors (20 to 32 people) barber business owners in Malang City. The time is 13.00 -20.00 (GMT +7) with the consideration that for the morning until noon in general, business actors are running their business. The second session refers to stages 2 and 3 with the subject matter of determining the cost object and the preparation of the COGS along with the profi t and loss report on the Sales of Go-Barber Services. The monitoring and evaluation stage is needed to explore various obstacles if in the fi eld implementation adjustments and improvements are needed in accordance with the development of their business environment. The following Table 2 is a summary of the implementation of mentoring:

Results
This training activity aims to explore the current problems in the midst of accelerating information technology (digitalization) which requires business owners, especially barber shops, which have been occupying permanent places and are required to be mobile and door-to-door to consumers. Therefore, to support the change in the new way of working, the introduction and understanding of the role of accounting to Go-Barber business owners regarding the benefi ts of accounting records in determining the selling price of services is a demand that cannot be avoided. Figure 2 shows that business owners carefully follow the material presented by the presenters.
Training in determining and measuring cost objects is the main activity of this community service program. The purpose of third stage is to provide knowledge, understanding and skills for barber shop owners to lead to innovation to become Go-Barbers. The training at this stage is based on observations made by business actors, that planning is often considered a "programmed" job and does not even require routine planning. However, if a phenomenon occurs, for example: changes in the business environment due to technological developments or competitors who are growing rapidly, which require a quick response, then business actors often have diffi culty planning and reanalyzing business processes | 628 | ABDIMAS: Jurnal Pengabdian Masyarakat Universitas Merdeka Malang Volume 7, No 3, August 2022: 621-633 to anticipate changes in the market environment. As a result, business stagnation occurs and it is not uncommon to experience problems in determining costs due to a lack of ability to analyze activities that can cause costs.

Figure 2. Training program implementation
Fourth stage is carried out with the aim of monitoring the implementation, especially in the transition period from barber shop to Go-Barber. Monitoring results will be used by instructors to evaluate for improvements or adjustments based on developments in business conditions. Changes in Go-Barber activities are possible because of consumer demands so that barber shop business owners can adapt their business services to market needs. Thus, re-planning of the business model to structuring cost activities will also automatically become a necessity.
The training in stages 3 and 4 was carried out in one of the barber community places in Malang. The training was attended by 32 representatives from the barber community and 3 presenters, one of which is shown in Figure 3 below:

DISCUSSION
The main idea in this mentoring and training covers the function of cost accounting, including recording and measuring various cost elements that arise from activities as a source of costs. Through tracing, either directly or indirectly to activities, it will provide information about costs that fl ow through business processes. Parallel tracking of objects and cost fl ows is shown in Figure 4 Identifi cation of the right cost object will provide accuracy in determining the COGS which is necessary in determining service prices. However, traditional COGS which focuses on determining the price of raw materials (Indonesian Accountants Association, 2019) and direct costs will fi nd it diffi cult to determine the price of services. This is because many activities incur costs that are not easy to trace (indirect costs), for example fuel for barber mobility, electricity usage, and communication costs required by barbers, not to mention when referring to the professionalism of the barber, service hours are the main thing to determine the rate.
The following is an example of calculating COGS based on data available in 2021, and assuming the same eff ect in 2022. Go-Barber predicts costs incurred based on actual activities in 2021: Raw materials = Rp 6,000,000 Transport (fuel) = Rp 5,000,000 Barber studio maintenance = Rp 2,000,000 Electricity bill = Rp 600,000 Water bill = Rp 1,200,000 Communication bill (data plan) = Rp 2,000,000 Block notes = Rp 100,000 Mechanical pens = Rp 50,000 Based on these data, overhead costs can be allocated on the basis of supporting raw materials to determine the predetermined overhead rate in 2022: Rp8.000,000 Rp5.000,000 x100% = 160% In addition, it is also necessary to determine the over/underapplied overhead costs that occurred in the previous year (2021)  Over/underapplied overhead cost = Rp1,600,000 After successfully obtaining over/underapplied overhead cost, then the COGS determination can be calculated by comparing when the service is provided at the hairdressing studio with when the service is mobile, Calculation of COGS determination can be seen in Table 3 to Table 5 below:  In Table 3, it is shown that the COGS when occupying the studio and becoming a Go-Barber there was an increase of 9%, from Rp. 1,662,500 to Rp. 1,812,500 due to transportation costs that must be borne by the Go-Barber. So, if the service price is Rp. 100,000, then the average number of customers to cover COGS while still occupying the studio is 17 people. Meanwhile, when he became a Go-Barber, the target customer was 18 people. Likewise, as shown in table 4, if Go-Barber actors try to increase the service price (markup) by 50%, equivalent to Rp. 150,000, then the target customer to close HPP is 12 people/month (Table 5). From the COGS model, it can be seen that in general the costs incurred are variable costs and are not easy to trace (Mowen, Hansen, & Guan, 2006). This training and assistance can be said to provide benefi ts for barber business owners in Greater Malang. This can be seen in the condition of barber entrepreneurs as shown in Figure 5, ranging from 40% to 78% of barber entrepreneurs who do not understand the role of accounting in determining selling prices based on activities. Along with the mentoring period, the results of monitoring during the training conducted by the instructors/presenters on 32 participants of the COGS determination program to determine the selling price of services, can fi nally be categorized as their level of understanding. Barber business owners who have understanding and skills in tracing, planning activities and assigning costs to activities that occur, 37.50% to 53.13% are categorized as very understanding, while between 43.38% to 40.63% quite understanding. This categorization is as shown in Figure 6.

CONCLUSION AND RECOMMENDATIONS
So far, the problem of MSME business actors is the general decline in sales because the sales strategy so far is conventional, that is, the place of business is located in a permanent location and has not used information technology. However, with environmental changes (especially the Covid-19 pandemic) also having an impact on the fi nancial performance of Go-Barber MSMEs in Malang City, business owners automatically cannot avoid market pressures which are ultimately required to re-plan in responding to market pressures that demand innovation from Barber Shop to Go-Barber. This response also includes primarily about accounting records and cost analysis for determining selling prices. Thus, this training can provide benefi ts for decisions to innovate. In addition, through the cost object information as the basis for making COGS, the profi t/loss of barbers can also be known. This means that through analysis of accounting information, it can provide benefi ts in making future business decisions, namely providing the ability for Go-Barber to plan service activities, as well as determining the selling price of services in the future. This training program with the benefi ts for the formation of innovation for business actors is rather signifi cant. However, the limitations of this program are in terms of funding, especially for business owners to take part in various other trainings, especially if they are paid. In addition, competence in fi nancial analysis and accounting records needs to be continuously developed in terms of assistance for Go-Barber business owners. The local government as a regulatory body, through MSME cooperatives, should continuously provide facilities and infrastructure, such as assistance on access to capital for the realization of wider innovation.