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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.

Sees the objective of teaching financial management to be to help managers and potential managers to make sensible investment and financing decisions. Acknowledges that financial theory teaches that investment and financing decisions should be based on cash flow and risk. Provides information on payback period; return on capital employed, earnings per share effect, working capital, profit planning, standard costing, financial statement planning and ratio analysis. Seeks to combine the practical rules of thumb of the traditionalists with the ideas of the financial theorists to form a balanced approach to practical financial management for MBA students, financial managers and undergraduates.

The purpose of this paper is to evaluate the accuracy of life cycle cost analysis (LCCA) for institutional (higher education) buildings as a predictor of actual realised facility costs.

Research methodology includes a comprehensive literature review to identify issues, best practices and implementation of LCCA in the construction industry. A case study was conducted to evaluate the accuracy of LCCA in predicting facility costs.

Notwithstanding the benefits of LCCA, its adoption has been relatively slow for institutional buildings. The case study revealed that the average difference between estimated and actual construction cost is 37 per cent, whereas the average difference between the actual and estimated maintenance cost is 48 per cent. There is an average difference of 85 per cent in the actual and estimated administration cost.

While limited to a few buildings, the case study underscores that LCCA methods should not be used for cost predictions of facility performance but rather for comparing total costs of alternative building features and systems, as well as building types. Sensitivity analysis also revealed that the selection of a discount rate would have less impact on recurring costs estimates compared to non‐recurring cost estimates. Facilities managers' involvement in LCCA technique developments and implementations will likely improve its performance during programming phases.

The value of LCCA procedures is limited as a predictor of actual realised facility costs. Educational institutions can use the methods described in this paper to replicate the study and arrive at their own conclusions regarding the LCCA techniques and their potential use in programming stages.

The paper evaluated the accuracy of LCCA for institutional buildings and the potential of LCCA as an asset management tool for institutional buildings and provided suggestions to improve its adoption in facilities management.

This study uses a budgeting experiment to examine the effects of peer influence and firm earnings position on managerial honesty. In the experiment, participants report production costs to request funds from the firm based on their actual private cost information. The firm’s earnings position is manipulated at two levels, a gain condition and an edge condition, and the authors find that participants overstate costs (i.e., are less honest) to a greater extent in the dishonest peer influence condition than in the honest peer influence condition. The authors also find that the effect of peer influence on managerial honesty is context dependent. Specifically, participants respond to both dishonest and honest peer influence in the gain condition but they do not respond to peer influence in the edge condition. This study provides evidence for honest peer influence on honesty and it highlights the role of earnings position on the effect of peer influence on honesty. Controlling the disclosure of certain peer information is not possible because individuals can learn about peer information (honest or dishonest) formally or informally. Such uncontrollable peer information may be harmful to firms. The results suggest firms that provide managers with the consequences of managerial budgeting on the firm operational outcomes can neutralize the effect of peer influence on managerial honesty when managers’ budgeting decisions significantly affect firm profits.

We examine the effect of peer honesty on focal manager honesty in a budget reporting setting. We disclose peer honesty to the focal manager at three levels: no, partial, and full disclosure of the reporting behavior of the other managers in the focal managers’ cohort. In partial disclosure, only the reports of the least honest peers are disclosed to the focal manager. In full disclosure, all managers’ reports in the cohort are disclosed to the focal manager. We predict and find that disclosure of other managers’ reports leads to less honesty compared to the absence of disclosure. We show that disclosure changes the focal manager’s perceptions of what constitutes acceptable reporting behavior, such that reporting more dishonestly becomes more acceptable. Our results have implications for understanding fraud dynamics and have practical implications for the design of control systems, as they suggest that managers will use peer dishonesty to justify their own dishonesty, even when they know that only some of their peers report dishonestly.

The purpose of this paper is to apply the statistical tolerancing technique to analyze the dual responses of APFA arm height deviation with respect to next stage of disk assembly process and simultaneously optimize and allocate the required tolerance of the responses onto its components at minimum cost of manufacturing and the quality loss.

The relationships between the dual responses of APFA heights and the geometric dimensions and tolerances of APFA components, and orientation of the assembled part with respect to disk assembly were first defined. The effects of the APFA orientation, and the component tolerances on the distributions and variations of the responses were derived and investigated in terms of resultant product/process performance, quality loss, and the cost of assembly. The tolerance cost-based objective function is then formulated as the combined manufacturing/assembly cost and the quality loss. Direct search method was used to find the best feasible tolerance solutions satisfying the required product performance at minimum cost.

The constructed relationship or transfer functions of the dual responses were probabilistic depending on the orientation of part with respect to the next assembly process. The Monte Carlo simulation is empirically suitable for the computation of the conditional distributions of the responses against the first-order linear approximation of component variances. The proposed solution of tolerance control plan increases the product performances, C _pm , from 0.6 to be at least 1. The proposed tolerance allocation plans will reduce the amount of rework currently as high as 5 percent to at most 0.01 percent with minimally increased assembly cost.

This proposed methodology to design and allocate component tolerances is suitable and applicable to the APFA assembly process. The derived assembly functions of probabilistic type relating the responses to the process and component characteristics can represent the actual dynamic of assembled part better than a traditional single deterministic function developed under static concept. This presented methodology can be applied to other assembly cases where quality characteristic depends on the part dynamic.

This research simultaneously optimized the dual APFA height deviation responses with minimum cost of tolerance and quality loss using two different conditional distributions and transfer functions of the resultant deviations generated from dynamic of APFA with respect to disk.

THE article that appears in this issue entitled ‘Machine Design and the Work Study Analyst’ illustrates that the techniques of work study can be equally well applied in fields outside of production.

The tool described is most appropriate for a first-level undergraduate course in cost/management accounting, which is typically taken in the second year of a post-secondary business program.

This chapter discusses a method for teaching a challenging topic within cost/management accounting, which is calculating variances for expenses. The proposed methodology focuses on a “common sense” understanding of variances as differences between budgeted and actual results. The new approach (i) uses a golfing analogy as a frame of reference, (ii) includes questions to assist in the analysis, and (iii) provides a table to organize and calculate variances. The variances examined include eight common expense-side variances used by manufacturers: material price and efficiency variances; labor price and efficiency variances; variable overhead spending and efficiency variances and fixed overhead spending and production volume variances.

By using this tool, students will be able to understand how and why variances are calculated. It will also provide them with better insight into appropriate corrective action that will address deviation from plans.

I provide a template to facilitate the calculation of variances, along with a list of questions that will guide students in their analysis. I also give an application of the suggested approach, using a standard textbook problem.

SPEAKING at a meeting of the Engineering Industry Marketing Group of the Institute of Marketing recently, Sir Montague Finniston, FRS, FMS, made an attack on the future plans of the British Steel Corporation. He maintained that to make substantial cuts in the Corporation's steelmaking capacity was “absurd”.

This study contributes to the participative budgeting and budget misrepresentation literature by exploring: (1) whether managers’ judgments of fair behaviors are malleable and context-dependent and (2) if these judgments of fair behavior impact cost reporting misrepresentations. Two experiments investigate these questions. Experiment 1 (n = 42) tests whether the behavior that managers judge to be “fair” differs based on the decision context (i.e., initial economic position [IEP]). Experiment 2 (n = 130) investigates: (1) how managers’ deployment of fairness beliefs influences their reporting misrepresentations and (2) how decision aids that reduce task complexity impact managers’ deployment of fairness beliefs in their misreporting decisions. The study found that managers deploy fairness beliefs (i.e., honesty or equality) consistent with maximizing their context-relevant income. Hence, fairness beliefs constrain misrepresentations in predictable ways. In addition, we find more accounting information is not always beneficial. The presence of decision aids actually increases misrepresentations when managers are initially advantaged (i.e., start with more resources than others). The implications from these findings are relevant to the honesty and budgeting literature and provide novel findings of how managers’ preferences for fairness constrain managers from maximizing their income. The chapter demonstrates that contextual factors can influence the deployment of managers’ fairness beliefs which, in turn, differentially impact their reporting misrepresentation. Another contribution is that providing decision aids, which reduce task complexity, may not always benefit companies, since such aids may increase misrepresentation under certain conditions.