Cost Knowledge and Cost-Based Judgment Performance

2001 ◽  
Vol 13 (1) ◽  
pp. 1-18 ◽  
Author(s):  
David T. Dearman ◽  
Michael D. Shields
Keyword(s):  
Cost Accounting ◽  
Performance Model ◽  
Future Research ◽  
Accounting System ◽  
Activity Based Costing ◽  
Cost Information ◽  
Good Judgment ◽  
Knowledge Content ◽  
Cost Accounting System ◽  
The Cost

This paper reports evidence on how managers' cost knowledge affects their cost-based judgment performance when a volume-based cost accounting system is used and products have diverse resource consumption. The evidence indicates that managers who have activity-based costing (ABC) knowledge content and/or an activity knowledge structure debias the cost information to have relatively good judgment performance. In contrast, managers with only cost-accounting knowledge content have relatively poor judgment performance. The judgment performance model (Libby and Luft 1993) provides the theoretical framework for this paper. Implications of this paper for future research are discussed.

The Study of Improving Cost Accounting System and Additional Disclosure of Cost Information

2017 ◽  
Vol 15 (1) ◽  
pp. 103-132
Author(s):  
Tae Ho Eom ◽  
◽  
Jung Gyu Park ◽  
Geun Ho Choi
Keyword(s):  
Cost Accounting ◽  
Accounting System ◽  
Cost Information ◽  
Cost Accounting System

Activity-Based Costing and Cost Interdependencies among Products: The Denim Finishing Company

2005 ◽  
Vol 20 (1) ◽  
pp. 51-62 ◽  
Author(s):  
Dennis Caplan ◽  
Nahum D. Melumad ◽  
Amir Ziv
Keyword(s):  
Production Process ◽  
Production Line ◽  
New Product ◽  
Cost Accounting ◽  
Activity Based Costing ◽  
Cost Information ◽  
Accounting Systems ◽  
Full Cost ◽  
Level Information ◽  
The Cost

A fictional example illustrates how interdependencies among products in the production process, and the costs associated with those interdependencies, challenge the ability of cost accounting systems to generate decision-useful product cost information. The cost interdependency in the current example is a production-line change-over cost that is incurred to retool a machine whenever the production process changes from one product to another. Both marginal costing and full cost activity-based costing (ABC) are employed in an attempt to provide decision-relevant product-level information in connection with the decision to add a new product.

of the information given to the shareholders, precautions to take for upward appraisal of capital assets, choice of an investment, and dividend policy. In order to raise enough capital for its business, the Company had to inform a growing number of shareholders, which soon became inconsistent with the managers’ freedom to deal with ac­ counting information according to their own needs. The resoultion of this problem led to the distinction between standard­ ized financial accounting for external and management account­ ing for internal use. As it became more and more efficient and advanced, the accounting system led to its own splitting. CONCLUSION Compared to most of the firms, Saint-Gobain had to face very early (in the first half of the 19th century) the problems raised by the setting up of a management accounting system. However, it was not until 1820, 155 years after its creation, that it adopted double entry bookkeeping which included the calculation of costs. This evolution is mainly due to the spreading of the Industrial Revolution in France, which was responsible for the abolition of privileges and the growth of competition in the field of glass pro­ duction. During the period 1820-1880, the cost accounting system had been gradually improved, without any regular outside coercion, according to the needs of the management alone. This leads to two conclusions and two research questions. In 1880, the accounting system facilitated the reckoning of full costs with methods and procedures that are still in use (alloca­ tion of the overhead with the use of activity center accounts, up-to-date transfer pricing methods, analysis of the relationship be­ tween depreciation, dividends and investments, etc ). This full cost method is now over one hundred years old. The development and the mastering of that cost accounting system were absolutely necessary to start the next stage, that is to say the use of those costs to prepare estimates of costs and investments. That stage took place over four decades (1890 to 1930) and led to real budget control towards the end of the Second World War. It should be recognized that the accounting systems of a given period can be very different from one another, which is particu­ larly true in the 19th century, therefore research should look at the variables on which the accounting system of each firm depends. Among the internal ones, the size of the firm, the culture of its

2014 ◽  
pp. 267-267
Keyword(s):  
19Th Century ◽  
Industrial Revolution ◽  
Transfer Pricing ◽  
Cost Accounting ◽  
Accounting System ◽  
Accounting Systems ◽  
Cost Accounting System ◽  
The Cost ◽  
Double Entry ◽  
The 19Th Century

The Design and Implementation of Team Cost Accounting System Based on Dynamic Data Collection

2010 ◽  
Vol 439-440 ◽  
pp. 1277-1280
Author(s):  
Hong Jun Guan
Keyword(s):  
Information Technology ◽  
Data Collection ◽  
Cost Accounting ◽  
Production Equipment ◽  
Accounting System ◽  
Dynamic Data ◽  
Design And Implementation ◽  
Collection Data ◽  
Cost Accounting System ◽  
The Cost

With the development of information technology, as the basis of economic accounting of the companies, it is possible for team cost accounting to be provided with various of basic data collection, data processing and sharing of such data. First of all, the related technology is introduced, then combined with the production process of C4 workshop, it described the analysis result and scheme. In this process, obtaining dynamic data from production equipment is the first step, then according to different devices and various requirements of product cost accounting, calculate the cost for each team, and finally realize the need for assessment of the teams.

scholarly journals Activity-based costing on the example of prune-drying company

2014 ◽  
Vol 59 (3) ◽  
pp. 363-373
Author(s):  
Nikola Popovic ◽  
Marina Vasilic
Keyword(s):  
Indirect Costs ◽  
Cost Accounting ◽  
Production Costs ◽  
Quality Data ◽  
Accounting System ◽  
Activity Based Costing ◽  
Accounting Systems ◽  
Business Decision ◽  
Modern Approach ◽  
Cost Accounting System

This paper examines the possibility of application of the activity-based costing in a company engaged in drying fruit. Activity Based Costing (ABC) was developed due to the shortcomings of traditional cost accounting systems, which was shown to have serious limitations, on one hand, and due to the need for more accurate cost price, on the other. This is of great importance for business decision making, which requires quality data and information, because the intense technical and technological progress has significantly altered the environment companies operate in. Along with this fact, major changes in cost structure occurred, which reflected through the increase of the indirect cost portion, and decrease of direct labor and material costs. Traditional cost accounting methods allocate indirect production costs using keys which are no longer appropriate for the new circumstances, and therefore typically allocate unreasonably high amount of indirect costs to those products which are produced in larger series. ABC cost accounting system firstly allocates indirect costs to pre-defined activities, and afterwards carries them to cost and profit drivers. The application of ABC costing in Serbia is at the very beginning. Having in mind that the privatization and the restructuring phase in the economy is followed by the establishment of a new management with fresh ideas, this can be a good timing for companies to introduce modern approach and modern methods of cost accounting. ABC method is very convenient for application in service companies, food processing industry, confectionery companies, driers, sugar refineries, breweries, dairies, mills etc.

scholarly journals Managing customer profitability to improve corporate performance in PSF

2017 ◽  
Vol 15 ◽  
pp. 316-324
Author(s):  
Antonella Cugini ◽  
Silvia Pilonato
Keyword(s):  
Cost Accounting ◽  
Professional Service ◽  
Accounting System ◽  
Service Firms ◽  
Activity Based Costing ◽  
Customer Profitability ◽  
Professional Service Firms ◽  
Value Drivers ◽  
Profitability Analysis ◽  
The Cost

The paper discusses issues related to cost accounting systems and customer profitability analysis in professional service firms (PSFs), which have rapidly increased in Europe during the last decade. Because few research studies on cost accounting and customer profitability in PSFs have been reported, one of the main paper’s contributions relies on exploring the informative advantages of activity-based costing (ABC) compared to the cost centre accounting system. The research methodology used is a case study in which it is possible to investigate the link between the PSF’s costs and pricing/value drivers through service attributes and customer profitability analysis. The main findings show that the ABC system strongly supports the management of the cost–value relationship

A WORLD WAR II COST ACCOUNTING ASSIGNMENT

1990 ◽  
Vol 17 (1) ◽  
pp. 81-88 ◽  
Author(s):  
Dixon Fagerberg
Keyword(s):  
World War Ii ◽  
Cost Accounting ◽  
Production Plant ◽  
Accounting System ◽  
World War ◽  
War Effort ◽  
War Production ◽  
Cost Accounting System ◽  
The Cost

This article describes the development of a process cost accounting system for a war production plant in 1942. A variety of cost drivers were used for purposes of allocation of overhead. In addition, the role of the cost accountant in the war effort is emphasized.

Maintenance cost estimation: application of activity-based costing as a fair estimate method

2015 ◽  
Vol 21 (3) ◽  
pp. 258-270 ◽  
Author(s):  
Ahmed E. Haroun
Keyword(s):  
Cost Accounting ◽  
Management Tool ◽  
Accounting System ◽  
Activity Based Costing ◽  
Fuel Pump ◽  
Content Type ◽  
Industrial Sectors ◽  
Maintenance Activities ◽  
Traditional Costing ◽  
Cost Accounting System

Purpose – The purpose of this paper is to present the use of activity-based costing (ABC) approach as an alternative option to the traditional cost accounting system. The contribution of this study is to demonstrate, through a simple example, the application of that costing system in a service (maintenance) industry, i.e. the paper intended to develop a procedure for a cost model that help in calculating any maintenance job cost, to a reasonable degree of accuracy, based on the actual activities performed. Design/methodology/approach – This research uses a simple example whereby hypothetical activities and cost data of maintaining an injector and a pump, of an internal combustion engine, are used, presented and analyzed based on the use of the developed procedure. Findings – ABC system provides more accurate cost estimates rather than the traditional “order costing” methods that uses unit-level costs which are variable in relation to change in service volume. Traditional cost methods distort the costs by applying overhead uniformly over different jobs of varied complexities and activities scope. On the other hand, ABC is a useful means to distribute the overhead costs in proportion (fairly) to the actual activities performed in a specific job and, hence, enhance the rationality of decision making, i.e. will not distort the accounting information used for cost reduction, pricing, and evaluation matters. The results obtained from the analysis showed that allocating costs to the maintained injector decreased from $83.55 to $71.95 and, finally, to $67.57 when using the workshop-wide, two-stage and ABC overhead allocation methods, respectively; while that of the pump increased from $298.90 to $340.34 and, finally, to $359.48 when using the same three methods, in the same order, respectively. The result is quite fair when considering the complexity of the fuel pump, in terms of design and maintenance, when compared with the injector. Notice that using volume to allocate overhead costs results in over costing high-volume products, e.g. injectors (simple in terms of design and operation) and under costing low-volume products, e.g. pumps (more complex in terms of design and operation). The paper recommends to use ABC as a more accurate and fair method when charging maintenance job orders based on the analysis of costing two maintained items in the same premise while consuming different overhead resources. Practical implications – This study attempts to analyze different methods to calculate a specific corrective maintenance job order. It strives to remedy the drawbacks of the traditional overhead costing of a job order when using principles related to the size of service, such as the direct labor cost/hours, as an allocation base. Consequently, the study proposed a new costing method, i.e. application of ABC. The traditional costing approach is considered by many firms as the best costing method. Nevertheless, it allocates overhead cost over job performed uniformly (equally) not differentiating between the complexity of the job and variety of the activities performed, e.g. using the same allocation base for “oil change” and “fuel pump adjustment” activities. So, ABC prevents cost distortions (unfairness) that could not be prevented by traditional cost accounting system. The author believes that the method presented in this paper will provide a useful management tool for costing maintenance jobs based on the appropriate selected activity drivers in maintenance workshops. The method could be applied for costing maintenance activities in maintenance of all industrial sectors. Originality/value – The use of traditional costing method has proven to be distorted by applying overhead uniformly over different jobs of varied complexities and activities scope. In this paper the authors strive to present an effective costing alternative that outperforms the traditional ones with regard to overhead allocation. The paper aims to find reliable and fair maintenance costing method, i.e. to find out the relationships between maintenance activities and cost drivers. Although, ABC is widely used in manufacturing industry, no application or current research has presented an applicable thorough worked-out example, with the exception, to the author’s knowledge, of one in the aeronautical industry, to implement ABC method in maintenance industry. The importance of using this method comes from the fact that it provides, relatively, accurate and fair maintenance bills that provide customer satisfaction and firm good image. Hence, the paper is relevant in this respect and intended to contribute to the practice of maintenance management.

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