Type of Document Dissertation Author Harsh, Mary Frances URN etd-10212005-123004 Title The impact of activity based costing on managerial decisions : an empirical analysis Degree PhD Department Business Administration (Accounting) Advisory Committee
Advisor Name Title Killough, Larry N. Committee Chair Baldwin, Dirk S. Committee Member Brown, Robert M. Committee Member Foti, Roseanne J. Committee Member Leininger, Wayne E. Committee Member Keywords
- Decision making
- Cost accounting
Date of Defense 1993-03-31 Availability restricted AbstractThe inadequacy of traditional volume based product cost systems has become manifest in recent years as a result of increased competition, expanding product mix diversity, and increased manufacturing automation. Activity based costing (ABC) has evolved out of this environment as a system which attempts to better identify, measure, integrate, and communicate the total costs of the production activities.
Case study research on ABC systems describes the problems which prompted a cost system revision and the outcomes of the revision. These studies demonstrate that the installation of an ABC system usually does change the calculated product cost numbers by changing the way the overhead and support costs are measured and allocated.
The present study sought to investigate the impact of ABC product cost data on managerial decisions. Data were gathered by using a mail case scenario and questionnaire. The case scenario presented competitor information, historical information, and product costs data about a fictitious manufacturing firm who manufactured two products. The three groups of subjects, who differed by the types and amounts of product cost data received, answered questions on selling prices and special order acceptance.
The data were analyzed using MANOVA, ANOVA, MANCOVA, and ANCOVA. The results showed a significant difference between subjects who received volume based costing and those who received activity based costing, especially in the subjects' designated selling price of the low complexity/high volume product. The responses to the demographic questions and several voluntary written comments from subjects' indicated that competitor information was a more important factor than product cost data in making selling price decisions.
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