The impact of activity based costing on managerial decisions : an empirical analysis
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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.
- Doctoral Dissertations