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Article
Publication date: 1 January 1977

Bernard J. La Londe and Douglas M. Lambert

Inventory carrying costs represent one of the highest costs of distribution. Although they are a necessary input to the design of logistical systems, such costs are…

Abstract

Inventory carrying costs represent one of the highest costs of distribution. Although they are a necessary input to the design of logistical systems, such costs are ignored by many companies and when they are used usually represent estimates or industry benchmarks. The authors present a methodology designed to provide managers with a practical framework for determining the costs of carrying inventory.

Details

International Journal of Physical Distribution, vol. 7 no. 4
Type: Research Article
ISSN: 0020-7527

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Article
Publication date: 1 December 2000

John C. Groth, Steven S. Byers and Garland D. Simmons

Focuses on critical issues related to variable cost drivers essential in establishing criteria or parameters to consider in the modification and/or design of production…

Abstract

Focuses on critical issues related to variable cost drivers essential in establishing criteria or parameters to consider in the modification and/or design of production facilities. Key concepts and relationships influence the choice of alternative technologies and methods in the design, upgrading, modification, or expansion of manufacturing and process facilities. Cost relationships are important in evaluating whether to retain an existing facility or, alternatively, scrap the assets and “start over”. For brevity, focus is restriced to decisions concerning overhaul, modification, upgrade, expansion, abandonment, and fresh investment as “design”.

Details

European Business Review, vol. 12 no. 6
Type: Research Article
ISSN: 0955-534X

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Article
Publication date: 1 February 1993

Richard Dobbins

Sees the objective of teaching financial management to be to helpmanagers and potential managers to make sensible investment andfinancing decisions. Acknowledges that…

Abstract

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.

Details

Management Decision, vol. 31 no. 2
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 1 April 2000

D. Govender

The purpose of this paper is to report on the incidence of the choice between full‐cost and variablecost pricing, and to examine the factors that could possibly influence…

Abstract

The purpose of this paper is to report on the incidence of the choice between full‐cost and variablecost pricing, and to examine the factors that could possibly influence this choice. The findings indicate that whereas 74,5% of the firms use full cost for pricing their products, only 25,5% use variable costs. The research provides evidence that supports the size of the company, product type, stage in product lifecycle, materiality of fixed overhead costs and the objectives of the company as significant variables influencing the choice of the cost base for product pricing.

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Meditari Accountancy Research, vol. 8 no. 1
Type: Research Article
ISSN: 1022-2529

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Article
Publication date: 1 October 2006

Jing Chen

The paper seeks to develop an analytical theory of project investment.

Abstract

Purpose

The paper seeks to develop an analytical theory of project investment.

Design/methodology/approach

The authors derive a partial differential equation that the variable cost of a project should satisfy, determine a proper initial condition through a thought experiment, and solve the equation.

Findings

A formula of variable cost as an analytical function of fixed cost, uncertainty of the environment and the duration of a project is obtained.

Practical implications

The analytical formula enables systematic comparison of returns of different investment under different market conditions to be made. This refines the insights from real option theory in many ways. Since all production systems need fixed investment to lower variable costs, by providing an analytical theory about the relation among fixed costs, variable costs and uncertainty, this theory contributes a new foundation to investment theory and other different fields.

Originality/value

An analytical theory of project investment about the relation among fixed costs, variable costs, uncertainty of the environment and the duration of a project, which is the core concern in most business decisions, does not exist in the current literature.

Details

International Journal of Managerial Finance, vol. 2 no. 4
Type: Research Article
ISSN: 1743-9132

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Book part
Publication date: 28 September 2020

Joanna Golden, Mark Kohlbeck and Zabihollah Rezaee

Purpose – The purpose of this study is to investigate whether a firm’s cost structure (specifically, its cost stickiness) is associated with environmental, social, and…

Abstract

Purpose – The purpose of this study is to investigate whether a firm’s cost structure (specifically, its cost stickiness) is associated with environmental, social, and governance (ESG) sustainability factors of performance and disclosure.

Methodology/approach – This study uses MCSI Research KLD Stats (KLD) and Bloomberg databases for the 13-year period from 2003 to 2015 in constructing ESG performance and disclosure variables, respectively. The authors adopt the general cost stickiness models from Anderson, Banker, and Janakiraman (2003) and Banker, Basu, Byzalov, and Chen (2016) to perform the analysis.

Findings – The authors find that a firm’s level of cost stickiness is positively associated with certain sticky corporate social responsibility (CSR)/ESG activities (both overall and when separately classified as strengths or concerns) but not with other nonsticky CSR activities. The authors also show that the association between cost stickiness and ESG disclosure is incrementally stronger for firms with CSR activities classified as sticky. Furthermore, the authors provide evidence that ESG disclosure is greater when both cost stickiness and the degree of sticky CSR activities increase. The authors show that when cost stickiness is high and CSR activities are sticky, management has incentives to increase CSR/ESG sustainability disclosure to decrease information asymmetry.

Originality/value – The findings present new evidence to understand how management integrates cost management strategies with various dimensions of sustainability performance decisions and show that not all ESG activities are equally effective when it comes to cost stickiness. The authors also demonstrate that increased sustainability disclosure helps reduce information asymmetry incrementally more when both costs are sticky and CSR activities are sticky.

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Article
Publication date: 1 March 1974

D.M.C. Jones

Information provided for managers by an accounting department can be divided into two broad categories: (a) information which will help managers to control future costs

Abstract

Information provided for managers by an accounting department can be divided into two broad categories: (a) information which will help managers to control future costs incurred, and (b) information which will enable managers to be well‐informed when making decisions involving a choice between alternative courses of action. Both accountants and managers need to understand the way in which costs respond to changes in the level or type of activity if appropriate information is to be presented and used effectively. Furthermore, the ability to employ techniques such as standard costing, budgetary control and marginal costing, which are commonly used in planning and controlling organisations' activities, must be based on an appreciation of the basic relationships between costs and volume.

Details

Management Decision, vol. 12 no. 3
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 1 July 1982

Timothy F. Barrett

The total or integrated approach to physical distribution places an emphasis upon integrating those activities which are involved either directly or indirectly with the…

Abstract

The total or integrated approach to physical distribution places an emphasis upon integrating those activities which are involved either directly or indirectly with the provision of customer service. As such, it contrasts with the traditional approach to physical distribution which emphasises the separate individual activities and the cost minimisation of such individual activities, while ignoring the interaction between the activities and their impact on revenue. While the total distribution concept has seemingly gained wide acceptance, Ray, Gattorna and Allen claim that the reason why it is rarely implemented is “lack of adequate cost data”. This view is shared by Shirley who states “particularly needed are new ways of thinking about distribution costs; to consider their interdependence and contribution to profit”. This monograph attempts to respond to this need by providing a consideration of the Mission Approach to Physical Distribution, and how physical distribution accounting systems may utilise this approach to provide information not only on the costs but also on the revenue aspects of providing varying levels of customer service.

Details

International Journal of Physical Distribution & Materials Management, vol. 12 no. 7
Type: Research Article
ISSN: 0269-8218

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Article
Publication date: 1 May 1980

David Ray, John Gattorna and Mike Allen

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…

Abstract

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.

Details

International Journal of Physical Distribution & Materials Management, vol. 10 no. 5/6
Type: Research Article
ISSN: 0269-8218

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Book part
Publication date: 19 April 2017

Catherine Thomas

This paper shows that consumer preference heterogeneity affects whether multinational firms serve local markets via imports or local production. Firms are least likely to…

Abstract

This paper shows that consumer preference heterogeneity affects whether multinational firms serve local markets via imports or local production. Firms are least likely to choose local production over imports for product varieties that have relatively inelastic demand because transport costs have a smaller impact on the firm’s local profits for these products. The results suggest that there is complementarity between centralized production, with local market access via imports, and strategies that maintain low price elasticities at the brand level, such as advertising and within-brand product proliferation. A partial equilibrium study of the laundry detergent industry in Western Europe illustrates how firms and consumers interact at different levels of transport costs and reveals the product varieties that are most and least likely to be manufactured locally when transport costs are high.

Details

Geography, Location, and Strategy
Type: Book
ISBN: 978-1-78714-276-3

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