教程案例课件week abc critique-lecture

1、Management Accounting 2Week 2 Critique of ABCLearning esUnderstand and be able to discussThe factors that led to the development of ABC and other modern management accounting techniquesHistorical factorsEconomic factors Cultural factorsResearch evidence for the effectiveness of ABCThe role of consul

2、tants in the development of modern management accounting techniquesThe merits and limitations of ABC and the context in which it has been found to be most valuableWhat we are going to doQuick revision of historical development of management accountingConsider the challenges posed by the changing ext

3、ernal environmentConsider how management accounting has responded with a focus on ABCConsider research findings on ABC in this context including:The challenges of doing management accounting researchReview some papersThe development of management accounting techniquesTrading in Italy Venice, Florenc

4、e and GenoaLuca Pacioli Father of accountingSumma de Arithmetica, Geometrica, Proportioni et Proprotionalita 1494Development of estates development of stewardship conceptIndustrial revolution and joint stock companies standard costing the concept of decision usefulnessBased on a Model T Ford model o

5、f productionHigh and variable labour costsLow overhead very low management costsPost WWIIIncreasing international tradeInfluence of the militaryDevelopment of management with emphasis on strategy and planning More history!Post World War II (in UK and US)Development of capital markets to finance proj

6、ectsDominance of financial accounting based on need to mitigate agency costsBusiness school MBAs in head office no operational knowledgeAnglo America v Germany v JapanInfluence on management accounting developmentsAnglo AmericaEfficient capital markets; separation of ownership and controlDominance o

7、f financial accounting MarketsJapanPost war reconstructionKeiretsu system: Mitsubishi, Mitsui, SumitomoClan regulationGermanyPost war reconstructionRole of banksWorker participation, craft workersFinancial accounting and taxHierarchiesOuchi , 1980, Markets Bureaucracies and ClansThe changing environ

8、mentInfluence of technologyIn product development demands for flexible and adaptable production capabilityIncreasing R&D costsIn production technology CAD/CAMIn communications electronic data interchangeChanging consumer tastes and demandQualityCustom v standardisedLocal v globalIncreasing globalisa

9、tionNew low cost competitors rise of Germany, Japan and now China and BRICsNew approaches to manufacturingNew markets Economic development rising demand Custom v standardisedLocal v globalScale and scope of operationsTraditional production lineLinearStocks held at each stageCosts measured as inputs

10、proceed through each production stageCost push systemTraditional Production and Costing ASSEMBLY LINEMaterials inFinished goods outQuality ControlRejectsResult: High cost, low quality productsNew approaches to productionQuality control at each stageMinimise stock at each stageDemand ledCell based; d

11、emand led; just in time; emphasis on throughput stock held only at bottlenecksRelevance lost?Traditional management accounting techniques increasingly seen as irrelevant in the new environmentFord production lines no longer the normDirect labour costs ing much less significant and increasingly fixed

12、Overhead and indirect costs much more significant Research and developmentMarketingPost sales service Todays management accounting information is too late, too aggregated and too distorted to be relevant for managers Johnson and Kaplan 1987 Relevance lost: the rise and fall of management accountingH

13、ow has management accounting responded?Activity based costingRecognises Increasing levels of overheadIncreasing significance of post production overheadOutput measures no longer adequate as a basis for apportioning overhead to units of productionBut Glorified absorption costingIs still grounded in a

14、 cost push approach.Still concentrated on production and post production costsDoes not take account of research and development/ product development costsBased in a production environment (as compared with services)Just another management fad pushed by consultantsThe Schrader Bellows case studyLesso

15、ns from Schrader BellowsABC useful when:Wide range of productsWide range of volumesOtherwise ABC may not yield very different results than absorption costingCostly to implement:Alters power relationshipsHas implications for the way that management costing information is collected and therefore for I

16、T systemsCare has to be taken in responding to ABC information What does research have to say?Challenges of management accounting researchProprietorial information commercial confidentialityCase study based research richness in interpretation but limited in generalizabilityProblems associated with s

17、urvey and questionnaire based researchShared understandingBias in responsesAre the responses genuine?Interpretive and critical studies dominate over quantitative empirical studies Based in sociology, pyschology and political economySome research papersArmstrong 2002 an evaluation of the unforeseen c

18、osts of implementing an ABC systemBhimani and Piggott 1992ABC shifts the relative authority and power base of managersBjornenak and Mitchell 2002Literature review mostly US (quants) UK (qual)Driven by consultants and practitioner audienceDugdale Jones 2002Example of interpretive study of development of ABC Fads, fashions and the role of consultantsKapla