In defence of traditional cost and management accounting
Journal Title: Journal of Management Research and Analysis - Year 2018, Vol 5, Issue 1
Abstract
The theory and practise of traditional cost and management accounting has been under severe criticism in recent years Professionals working in industry and academia world over have critically debated over traditional conceptrsquos relevance for cost control performance appraisal product costingpricing and decisionmaking purposes Critics contend that in a world class manufacturing environment WCM characterised by concepts of just in time JIT and total quality management TQM traditional costing becomes redundant as a performance measurement decision making and cost control tool Johnson1987 They argue that traditional costing induces dysfunctional behaviour amongst employees because of fear of adverse variances being attributed to them Birnberg 1992 and also promotes the concept of cost plus pricing Kaplan 1984 which is not relevant in the modern day dynamics where selling prices are decided by market forces Concepts as target costing and activity based costing are thought of to be more appropriate in todayrsquos manufacturing environmentThe impact of these criticisms has had a profound impact on the way this subject is perceived be it academia or the industry or professional bodies regulating the profession of accounting Arguments in favour of traditional costing still remain however the winds of changes appear continuous A long and time tested language is being pushed into oblivion being replaced with tools and techniques of the modern era which have and are being brought forward as betterments over the so called limitations of the traditional nbspstructureThe objective of this paper is two fold1nbspTo identify various limitations attributed to traditional cost and management accounting in modern competitive environmentTo critically examine these various limitations in terms of both assumptions and objectives attributed by critics to the functional domain of cost and management accountancy
Authors and Affiliations
R. K. Srivastava
Keywords
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- EP ID EP514110
- DOI 10.18231/2394-2770.2018.0003
- Views 176
- Downloads 0
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