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Journal of Management 1989, Volume 1 Contents
Reminiscences about Management Accounting Robert N. Anthony Abstract: Old folks like to reminisce. So when Bill Ferrara invited me to write on the "Past, Present, and Future of Management Accounting," I jumped at the opportunity. This article is mostly personal. It is based on first-hand, or at the most second-hand, experiences, plus the recollections of a few colleagues. As is the case with most social science subjects, there are no adequate data on the prevalence of various practices. This situation is unfortunate for the would-be historian; however, it also means that proving me wrong about my comments on such matters will be difficult. Return to TopCost and Management Accounting: Yesterday and Today Charles T. Horngren Abstract: My aim in this paper is to reflect on the changes in cost accounting throughout my 32-year university teaching career. Both my early and recent experiences in teaching and writing in this field are commented upon. In particular, I shall focus on some "before" and "after" comparisons between the 1950s and the 1980s. Regarding the future, I leave the predictions to others. Return to TopManagerial Cost Accounting: Present and Future Gordon Shillinglaw Abstract: Management accounting today is built largely on concepts, techniques, and measurement principles that were firmly established by 1960. It has only a few basic elements;
Managerial cost accounting has essentially the same scope as management accounting because few managerial uses of cost data are limited to cost considerations alone. In this paper, however, managerial cost accounting is identified more narrowly as the estimation, accumulation and analysis of operating cost data for managerial purposes and the reporting of the results of those processes to management on a timely basis. This paper examines the major criticisms that have been directed at the costing systems incorporated in management accounting and attempts to identify the actions practitioners and teachers will have to take to make managerial cost accounting a vital part of the management process as the 21st century approaches. Return to TopStrategic Cost Management: New Wine, or Just New Bottles? John K. Shank Abstract: One piece of anecdotal evidence regarding the plight of management accounting today is presented in a recent paper in Sloan Management Review [Turney and Anderson, 1989]. The paper describes recent changes in the accounting systems for the Portables Division of the Tektronix Company (portable electric measuring instruments). The theme is a familiar one - a business facing stiff competition with survival hinging on a new manufacturing strategy for which implementation was being endangered by "obsolete and restrictive accounting systems." The result seems a comforting one - the accounting systems were revised to bring them in line with the rest of the new operation, and the company is now prevailing over its competitors. But, a careful reading of exactly what changes were made at Tektronix should be chilling to anyone still committed to the AACSB's recommended management accounting curriculum. In the process of creating what they term a system of "accounting for continuous improvement," Tektronix decided to totally eliminate the following elements of its former management accounting system:
What Tektronix substituted instead of these supposedly "core" systems makes very interesting reading. However, the core systems were dropped as being obsolete. The same week this Sloan Management Review paper appeared, the American Management Association mailed promotional materials touting their latest seminar on "Fundamentals of Cost Accounting" (offered six times in early 1989, coast to coast, with CPE credit for CPAs). Also the same week, a firm specializing in up to date business software mailed to AAA members a sales brochure for a new software package called "The Management/Accounting Simulation" (designed specifically for courses in management accounting and cost accounting ... to maximize the educational value ... of appropriate managerial accounting techniques[s].") The reader is encouraged to guess how many of the concepts Tektronix has dropped as being obsolete are still prominently featured in the bullet list of key topics for the new AMA seminar or the new simulation package. Return to TopProduct Costing in Flexible Manufacturing Systems Dileep G. Dhavale Abstract: The product costing methods developed for conventional manufacturing systems are inappropriate for use in computer-integrated and automated manufacturing systems. These new systems have totally different operational characteristics which require redesigning of cost categories, overhead pools and allocation schemes. This paper develops a product costing model for a specific type of new system called a Flexible Manufacturing System. This model has two major cost components (direct materials and transformation costs) compared to the three found in conventional methods. Some setup costs are capitalized and charged to products when they are produced. To charge manufacturing costs accurately and correctly to the products processed, many different types of intermediate cost pools and allocation schemes are used. A numerical example based on a field study is presented to clarify the steps in the procedure. Return to TopResidual Analysis: A Better Methodology for Contingency Studies in Management Accounting Keith Duncan Ken Moores Abstract: This paper outlines the necessity for, and feasibility of, residual analysis methods in contingent theoretic studies. Various definitions of the concept of fit are presented along with suggested test methods. The application of residual analysis is illustrated by examining the interaction fit of authority structure and market competition and its effect on financial performance. Residual analysis is evaluated and guidelines are developed to enhance its potential for modeling fit in future management accounting contingency theory studies. Furthermore, it represents a development in test methods that enables conceptual refinements to be explored. Return to TopAn Investigation of Organizational-Professional Conflict in Management Accounting Calvert C. McGregor, Jr. Larry N. Killough Robert M. Brown Abstract: Organizational-professional conflict (OPC) has been studied in public accounting, internal auditing, and various non-accounting professions. The management accountant has long been regarded as an important member of management in industrial organizations. Management accounting has in recent years taken actions to become a profession (Certifying Examination, Code of Ethics, Professional Standards). The combination of these conditions affords the opportunity to study the antecedents and consequences of OPC for members of a profession employed in industrial organizations. To study this phenomenon, questionnaires were mailed to members of the National Association of Accountants. A 47 percent response rate yielding 281 questionnaires resulted. Of this number, 201 respondents were functioning as management accountants and thus constitute the sample from which the conclusions were drawn. Correlation and path analysis were the statistical tools used to analyze the hypothesized antecedents of OPC (organizational commitment, professional commitment, tenure with the organization, supervisory status, and conflict between accountants and supervisors regarding the professional status of management accounting). These same tools were also used to investigate the hypothesized consequences of OPC (job satisfaction and turnover intent). The hypothesized antecedents of OPC explained a significant portion of the variance of that variable. OPC, in turn, was found to explain a significant part of the variance of the variables, turnover intent and job satisfaction. The importance of the antecedent variables differed slightly between the two groups investigated, CMAs and non-CMAs. Return to TopSales Volume Forecasting: A Comparison of Management, Statistical, and Combines Approaches Kenton B. Walker Craig E. Bain Boise State University Abstract: This study reports on a comparison of statistical, management, and combined predictions of a key variable used to prepare sales and profit forecasts at a Fortune 500 manufacturing company. The management of the firm considers the predictor variable, sales volume, to be a substitute for financial performance. Two organizational subgroups, Sales and Production, are involved in preparing sales volume estimates for use by the company. The results show that statistical models can produce accurate sales volume forecasts, but forecasts relying on both management judgment and quantitative methods are more useful to management. A computerized model of the revenue and cost structure of the company, and management judgment, are ultimately used to transform sales volume projections into formal earnings and cash flow statements for top management decision making. Return to TopTests of Information Evaluation Behavior in a Competitive Environment William N. Dilla Four competing explanations of information evaluation behavior are proposed and tested in the dissertation. The first is based upon the expected utility hypothesis and the second on prospect theory [Kahneman and Tversky, 1979; Tversky and Kahneman, 1981]. The other two are based upon recent research on cognitive processes in judgment and choice, especially the work of Slovic et al. [1982] on framing effects in decision making under uncertainty. These two explanations are denoted uncertainty reduction and information as a valuable good. Two experimental variables, task setting and stated cost of information, are employed to distinguish between the four explanations. Return to TopNoncontrollable Costs and Optimal Performance Measurement Yooh Suh In this dissertation I attempt to provide several possible explanations for why managers are evaluated on the basis of costs over which they exercise no direct control. My focus is on the controllability of costs and responsibility accounting rather than the issue of fixed vs. variable costs. I define controllable costs as those costs that are under the direct control or discretion of a given manager during a given time span (adapted from Horngren [1982]). I use a multiple-agent model, where a firm consists of a principal and two agents, a service department agent and user/revenue department agent. The service costs in the model are treated as noncontrollable service costs to the revenue department agent by assuming that the principal or owner determines the amount of services to be used by the revenue department, i.e., the revenue department agent has no direct control or discretion as to those service costs. I examine rationales for basing the revenue department agent's compensation on those noncontrollable service costs which are uncertain at the time of the contract. Return to TopAn Application of Socio-Technical Systems Analysis to Accounting Variance Control Theory Michael F. Thomas Our descriptive, behavioral research demonstrates a different decision and control process than envisioned by normative theory. In many instances, foremen meet (formally or informally) at the beginning of the week to review production quotas and anticipated problems (adaptive planning). For global production optimization, a manager should be willing to incur a cost variance within his department if it is the least-cost corrective action for an anticipated problem. This will happen when he is not penalized for the cost variance during evaluation. As part of their daily operational monitoring and control function, information should be shared on the day-to-day problems encountered, the extent of the problems, and corrective actions taken or needed in subsequent departments. Again, though, this will not happen when performance is evaluated on within-department cost variance minimization. From this we can induce an Open Cybernetic System paradigm for organizational control, and gain greater insights into why cost variance reports are not as generally accepted in practice as we would like. Using this paradigm, we can then justify investigating methods and theories, such as Socio-Technical Systems Analysis (STSA), which has been shown to support organizational control in such open systems. The STSA process and procedures provide a means to map production problems, interactions, communication and information networks needed for operational control Return to TopA Review of Robert K. Yin's Case Study Research: Design and Methods William J. Bruns, Jr. Abstract: Before you leave your home or office to engage in research in the field, you should read this book. Robert Yin goes beyond his training as an experimental psychologist to explain when field research, which he calls case study research, is most appropriate and how it should be done. (I will use the terms "field studies," "case study research," and "field research" synonymously in this review.) His objective is to provide a guide to investigators who are trying to use field studies as a rigorous method of research. 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