Communications Project

Document Type:Dissertation
Name:David Shelby Harrison
Title:Activity-Based Costing & Warm Fuzzies - - Costing, Presentation & Framing Influences on Decision-Making ~ A Business Optimization Simulation ~
Degree:Doctor of Philosophy
Committee Chair: Larry N. Killough
Committee Members:Dr. Sheryl Ball
Dr. John A. Brozovsky
Dr. Wayne E. Leininger
Dr. Robert Williges
Keywords:managerial accounting, visualization, decision bias
Date of defense:April 8, 1998
Availability:Release the entire work for Virginia Tech access only.
After one year release worldwide only with written permission of the student and the advisory committee chair.


Activity-Based Costing is presented in accounting text books as a costing system that can be used to make valuable managerial decisions. Accounting journals regularly report the successful implementations and benefits of activity-based costing systems for particular businesses. Little experimental or empirical evidence exists, however, that has demonstrated the benefits of activity-based costing under controlled conditions. Similarly, although case studies report conditions that may or may not favor activity-based costing decision making, controlled studies that measure the actual influence of those conditions on the usefulness of activity-based costing information are few. This study looked at the decision usefulness of activity-based costing information under controlled, laboratory settings. An interactive computer simulation tested the ability of 48 accounting majors to optimize profits with and without activity-based costing information and tested to see if presentation format or decision framing would influence their outcomes. The research showed that the activity-based costing information resulted in significantly better profitability decisions and required no additional time. Presentation in graphic (bar charts) or numeric (tabular reports) format did not influence profitability decisions but the graphs took longer for analysis and decision making. Decision framing influences were shown to beneficially affect profitability decisions but did not require additional time. Decision framing was especially helpful with the non-activity based costing information; it had no significant effect on activity-based costing performance.

List of Attached Files

ch1.pdf ch2.pdf

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