Controlling Cost Using Budgetary Control and The Firm Financial Performance: A Case Study of PT Pupuk Kalimantan Timur

Abstract

PT Pupuk Kalimantan Timur is one of Pupuk Indonesia subordinates and under State-owned Enterprises of Indonesia (BUMN). Pupuk Kaltim’s main business is to produce and sell Ammonia, Urea, and NPK with domestic and foreign market segments. In the company, there are many business activities that need to be controlled and organized to align with the company goals. The three business is manufacturing, trading and service. In the manufacturing industry itself, there are seven plants including the main plant which are producing Ammonia, NPK and Urea and the supported plant, which is the utility plant. The trading activities consist of marketing and their supported component, then the service consist of maintenances and research. As we know before, if there is an income, there must be a cost to paid. To create big income and small cost to spend, there is a department that functions in planning and composing the budget to calculate the company expense also the other functions are to control and reporting the budget to align with the planned budget. The author used qualitative as type of research and using study case as the research design. There are two data collection method used, first is an observation and second is interview. The internship took one and half months in Bontang, East Kalimantan, Indonesia. The researcher was placed in the budgeting department by PT Pupuk Kalimantan Timur based on the university majors to help the company achieved their goals. From the interviews conducted in the department, the budgeting department function control a cost using budgetary control with cost reduction program as a tool to help the company achieve their goas and show its impact on the financial performance. In carrying out the budget control, there are difficulties faced by the department. The author then investigated the problem and suggested an idea to solved the problems to the department.