Search results

Preface The functions of business divide into several areas and the general focus of this book is on one of the most important although least understood of these—DISTRIBUTION. The particular focus is on reviewing current practice in distribution costing and on attempting to push the frontiers back a little by suggesting some new approaches to overcome previously defined shortcomings.

The purpose of this paper is to review literature on standard costing in Japanese manufacturing environment. It examines the changes in the manufacturing environment in Japan that has lowered the significance of standard costing in Japanese firms and investigates the current level of its applicability in Japanese firms.

The paper systematically categorizes the relevant literature and reviews it methodologically.

The paper finds that standard costing is still being used by a large number of firms both in developing and developed countries. Overall, the research suggests that the importance of standard costing has not declined to such a low level despite the technological changes. In Japan standard costing is still used for different purposes despite its apparent weaknesses.

This is not an empirical investigation of standard costing in Japanese manufacturing firms.

The paper will be useful to researchers, cost accountants and others concerned with product costing to understand the importance of standard costing. It is also expected that the current research will help reveal whether or not one should continue teaching standard costing in the classroom.

The paper contends that the strategic use of accounting at times of organisational change does not of necessity mean that organisations should adopt new accounting systems ‐ such as activity based costing or throughput accounting. Although not necessarily fully “compatible” with new manufacturing methods, standard costing systems can still continue to be useful. The article examines the changing role of the accounting system in two manufacturing organisations that have introduced a range of new manufacturing techniques over the last decade. These have included reducing inventories, the elimination of constraints and increased investment in automation. Despite these developments, both companies have made few changes to their existing standard costing systems. Possible problems identified in the literature as inherent with standard costing systems were, at least in part, overcome through a range of adjustments to existing accounting and other reporting systems, with the accounting system recognised as providing only part of the information needs of operational management. Also, although changes to the manufacturing environment had taken place, they were not of such a fundamental nature that wholesale change to the accounting system was either required or could necessarily be justified in terms of cost/benefit.

The use of accounting to help apply the principles of scientific management to business affairs is associated with the adoption of standard costing and budgetary control. This first British industry‐based study of the implementation of these calculative techniques makes use of the case study research tool to interrogate archival data relating to leading iron and steel companies. We demonstrate the adoption of standard costing and budgetary control early on (during the inter‐war period) by a single economic unit, United Steel Companies Ltd, where innovation is attributed to the engineering and scientific background and US experiences of key personnel. Elsewhere, significant management accounting change occurred only with the collapse in iron and steel corporate profitability that began to become apparent in the late 1950s. The process of accounting change is addressed and the significance for our study of the notions of evolution and historical discontinuity is examined. The paper is contextualised through an assessment of initiatives from industry‐based regulatory bodies and consideration of the economic circumstances and business conditions within which management accounting practices were the subject of radical revision.

Many authors have predicted that the shorter product life cycles, advanced manufacturing technologies, decreasing emphasis on labour in the production process, and global competition may lead to the demise of standard costing. This exploratory study aims to provide empirical evidence on the extent to which companies in Malaysia use standard costing. It also examines the differences in the use of such techniques between local Malaysian firms and Japanese affiliates.

From the industrial and consumer products sectors listed on the Kuala Lumpur Stock Exchange and 21 Japanese affiliates in Malaysia, 66 companies were surveyed.

Despite its various criticisms, the empirical findings suggest that standard costing is still being used by a large majority of firms in Malaysia. Thus, Malaysian companies (both Japanese and local) perceive that the basic principles of standard costing remain sound.

While the empirical results may be interesting, the findings represent an exploratory area of research which ultimately needs to be grounded in theory. To do this, future studies should undertake detailed case studies on management accounting in practice.

Provides empirical evidence of the extent of use of standard costing in Malaysia.

One of the most important aspects of managerial accounting is the accumulation of costs in the manufacturing process. This data is of value to the manager owing to the information it provides him for planning, control, and decision making. The purpose of this paper is to describe the different costing systems, compare them, and show how they affect the accumulation of costs for product costing, as well as decision making.

The apparent failure on the part of companies to evolve a satisfactory costing scheme for their physical distribution (PD) systems is now giving way before a sustained attempt to rationalise PD costs. The author reviews the legislative and economic changes which have led to a recognition of the need for change, and he suggests that the “Total Distribution” (TD) approach to a solution is the one to be explored. The distinctive nature of the different accounting schemes in use, and their informational requirements, are discussed. The complex nature of PD involves the use of both operational research and statistical techniques. In fact, the need for improved information for PD management is not yet being met, and this hampers decision‐making. The monograph looks at the shortfalls in financial accounting for PD, and at the complex and ambiguous relations between PD and the formal company financial statement. Finally, the profit‐analysis approach may be the answer, and this can be incorporated within the framework of a missions approach. The author concludes that, so far, neither orthodox accounting procedures nor experimental approaches have yet provided a complete answer for PD cost analysis.

Proposes a pragmatic approach to product costing. The approach involves two stages, namely the preparatory stage and the production stage. In the preparatory stage, standard routings are first extracted from existing products. A generic activity hierarchy is established according to the analysis of standard routings, where cost drivers for each activity are identified and summarized by appropriate Cost‐related Design Features (CDFs). Then the Maynard Operation Sequence Technique (MOST) is employed to analyze each operation of standard routings to determine the associated standard time. Historical cost data are analyzed to induce the relationships between the CDFs and standard time, namely Time‐Estimating Relationships (TERs). By allocating plant‐wide overhead costs to standard routings, the unit price of standard time is established to indicate Cost‐Estimating Relationships (CERs). A library of material costs is also summarized from existing products. In the production stage, CDFs are first induced from the schematic of a new design. Then a “dummy process plan” for this design can be inferred and used to retrieve the associated TERs to determine its time estimate. Once a standard time has been estimated, CERs can be applied to compile the total product cost by adding the estimated material costs. A case study conducted in an electronics enterprise is also reported.

This paper develops a case study on the application and implementation issues of a framework for costing planned maintenance. It outlines the methodology for the development of the case study and presents the major findings of the existing maintenance‐costing system of the organization under study. It presents the results of a pilot study of the application of the proposed costing framework to a sample of planned maintenance jobs. It provides recommendations and identifies critical issues for a successful implementation.

Standard Costing (SC) systems and Variance Analysis (VA) are tools used by managerial accountants to measure performance. These tools rely heavily on quantitative techniques such as statistical analysis.