Author : Robert Hutchinson
Publisher : Unknown
Page : 416 pages
File Size : 40,8 Mb
Release : 2007
Category : Managerial accounting
ISBN : OCLC:247520646
The Impact of Time-based Accounting on Manufacturing Performance by Robert Hutchinson Pdf
Advanced manufacturing strategies are often undermined by the legacy control mechanisms of another era. In response to today's hypercompetitive global business environment, many manufacturing firms have adopted new business strategies such as time-based manufacturing (TBM). While some firms credit their success in the marketplace to TBM and other advanced manufacturing strategies, still more have realized little or no improvement in performance. Post-implementation failures often find their root not in the manufacturing strategy itself, but in the lack of congruent control mechanisms. One of such important control mechanism is the firm's managerial accounting system (MAS). Despite evident appeal to both managerial accounting and manufacturing management, few managerial accounting innovations have developed at this interface. There is increasing recognition amongst managerial accounting scholars of the need for innovative studies to fill in the knowledge gaps and provide normative solutions for managerial accounting practice that has increasingly lost its relevance to modern manufacturing. This study demonstrates that the design of the MAS can significantly affect key manufacturing performance measures. Market, operational, and financial performance measures are utilized in this study in terms of demand fulfillment rate (DFR), cycle-time (CT), and net operating income (NOI) respectively. Three MAS alternatives traditional costing systems (TCS), activity-based costing systems (ABC), and the newly proposed time-based accounting (TBA) methods are all examined. This study employs a computer simulation methodology, which presents an opportunity for the direct comparison and quantitative measurement of this impact. The choice of methodology allows for the controlled introduction of supply and demand stochasticity along with differing levels of product mix complexity, modeled in environments with differing levels of manufacturing overhead burden. The results provide significant evidence of the importance of MAS design vis-à-vis manufacturing strategy. No single MAS outperformed all others along all performance measures, indicating the need to align the MAS to the manufacturing strategy. While MAS design alone may not ensure the success of an advanced manufacturing strategy, this study clearly demonstrates that it should be considered an integral part of the initiative. The introduction of TBA demonstrates how MAS design can better support a TBM strategy and regain lost relevance.