ABSTRACT We hear how firms have to become lean, eliminate non-value added activities and strive t... more ABSTRACT We hear how firms have to become lean, eliminate non-value added activities and strive to maximise asset utilisation, but there are inevitably firms with excess capacity that need relevant information to manage the cost of the under utilisation of resources. In this paper we question whether cost system designers have been taking appropriate account of the capacity issue, and ask whether the costing systems employed are sufficiently adaptable for fluctuating levels of capacity utilisation. We note that the capacity issue has received diminishing attention in the literature since the 1960s, and identify the dangers of not identifying the cost of spare capacity. We demonstrate how improper cost system design or usage can draw the firm into the death spiral. This danger not only exists when moving into a recession but also when recovering and resuming growth. We describe two cases that demonstrate potential pitfalls and alternative approaches to the capacity issue. The manufacturing case is an SME with a traditional costing system that was hindering management’s pricing and product mix decisions. Fortunately the death spiral was avoided as it was recognised that significant spare capacity was distorting costs and prices when the firm continued to base overhead absorption on budgeted production volumes. The service case relates to a large financial services company that implemented a complex activity based costing system and gained a much greater understanding of resource consumption and capacity utilisation, and hence established more effective cost control in their back office operations.
Working for patients established a new system of contracts between providers and purchasers of he... more Working for patients established a new system of contracts between providers and purchasers of healthcare, with prices based on full costs, avoiding cross-subsidization. The new regime necessitates greatly improved costing systems, to improve the efficiency of service provision by creating price competition between providers. Ken Bates and Stan Brignall argue that non-price competition also occurs, with providers 'differentiating' on quality of service/product, flexibility or innovation.
ABSTRACT Purpose – Two prior survey papers on the use and perceived merit of customer accounting ... more ABSTRACT Purpose – Two prior survey papers on the use and perceived merit of customer accounting practices, one in Australia and one in New Zealand, disclosed contrasting results with confusing elements. This survey replicates and extends the previous research to update and clarify our understanding of the use and perceived merit of Customer Accounting (CA) practices in New Zealand. Design/methodology/approach – A mail questionnaire survey was sent to 136 companies quoted on the New Zealand Stock Exchange, resulting in 44 useable responses (32.4%).Findings – This survey finds that mean scores for the usage and perceived merit of CA practices in New Zealand in 2009 are similar to those found in Australia in 2002, and much higher than those found in New Zealand in 2007. Also, a relationship between the use of activity-based costing (ABC) and the perceived merit of CA practices was found, but no relationship with actual CA usage. The research also found a strong positive relationship between the adoption of the customer concept of marketing management and the usage of customer profitability analysis at an individual customer level.Research limitations/implications – The survey method prevents follow-up questions and clarification of ambiguities, but the survey results point to several areas warranting further research.Originality/value – This survey provides academic researchers, teachers, and firms using, or considering the use of CA practices, improved understanding of the extent of current usage and perceived managerial merit of CA practices in New Zealand companies.
International Journal of Service Industry Management, 2003
... Scorecard (Kaplan and Norton, 1996), the Service Profit Chain (Heskett et al., 1997), the Res... more ... Scorecard (Kaplan and Norton, 1996), the Service Profit Chain (Heskett et al., 1997), the Results Determinants Framework (Fitzgerald et al., 1991), the Performance Pyramid (Lynch and Cross, 1991), Return on Quality (Rust et al., 1995) the Business Excellence Model (EFQM ...
Abstract Marketing and Management Accounting (MA) have traditionally been seen as poles apart in ... more Abstract Marketing and Management Accounting (MA) have traditionally been seen as poles apart in terms of both focus and approach. Innovative developments in MA measures and increasing pressure on marketers to prove their worth, combined with technological advancements ...
From April 1991 the UK's National Health Service (NHS) has radically changed following the i... more From April 1991 the UK's National Health Service (NHS) has radically changed following the implementation of the January 1989 White Paper 'Working for Patients' which has established a new system of contracts between the purchasers of healthcare and its providers. The ...
ABSTRACT In response to fierce criticism of irrelevancy and the need to adapt management accounti... more ABSTRACT In response to fierce criticism of irrelevancy and the need to adapt management accounting (MA) to fully support modern managerial priorities, there is a growing body of MA literature seeking to address the perceived weakness of customer-focused techniques ...
ABSTRACT We hear how firms have to become lean, eliminate non-value added activities and strive t... more ABSTRACT We hear how firms have to become lean, eliminate non-value added activities and strive to maximise asset utilisation, but there are inevitably firms with excess capacity that need relevant information to manage the cost of the under utilisation of resources. In this paper we question whether cost system designers have been taking appropriate account of the capacity issue, and ask whether the costing systems employed are sufficiently adaptable for fluctuating levels of capacity utilisation. We note that the capacity issue has received diminishing attention in the literature since the 1960s, and identify the dangers of not identifying the cost of spare capacity. We demonstrate how improper cost system design or usage can draw the firm into the death spiral. This danger not only exists when moving into a recession but also when recovering and resuming growth. We describe two cases that demonstrate potential pitfalls and alternative approaches to the capacity issue. The manufacturing case is an SME with a traditional costing system that was hindering management’s pricing and product mix decisions. Fortunately the death spiral was avoided as it was recognised that significant spare capacity was distorting costs and prices when the firm continued to base overhead absorption on budgeted production volumes. The service case relates to a large financial services company that implemented a complex activity based costing system and gained a much greater understanding of resource consumption and capacity utilisation, and hence established more effective cost control in their back office operations.
Working for patients established a new system of contracts between providers and purchasers of he... more Working for patients established a new system of contracts between providers and purchasers of healthcare, with prices based on full costs, avoiding cross-subsidization. The new regime necessitates greatly improved costing systems, to improve the efficiency of service provision by creating price competition between providers. Ken Bates and Stan Brignall argue that non-price competition also occurs, with providers 'differentiating' on quality of service/product, flexibility or innovation.
ABSTRACT Purpose – Two prior survey papers on the use and perceived merit of customer accounting ... more ABSTRACT Purpose – Two prior survey papers on the use and perceived merit of customer accounting practices, one in Australia and one in New Zealand, disclosed contrasting results with confusing elements. This survey replicates and extends the previous research to update and clarify our understanding of the use and perceived merit of Customer Accounting (CA) practices in New Zealand. Design/methodology/approach – A mail questionnaire survey was sent to 136 companies quoted on the New Zealand Stock Exchange, resulting in 44 useable responses (32.4%).Findings – This survey finds that mean scores for the usage and perceived merit of CA practices in New Zealand in 2009 are similar to those found in Australia in 2002, and much higher than those found in New Zealand in 2007. Also, a relationship between the use of activity-based costing (ABC) and the perceived merit of CA practices was found, but no relationship with actual CA usage. The research also found a strong positive relationship between the adoption of the customer concept of marketing management and the usage of customer profitability analysis at an individual customer level.Research limitations/implications – The survey method prevents follow-up questions and clarification of ambiguities, but the survey results point to several areas warranting further research.Originality/value – This survey provides academic researchers, teachers, and firms using, or considering the use of CA practices, improved understanding of the extent of current usage and perceived managerial merit of CA practices in New Zealand companies.
International Journal of Service Industry Management, 2003
... Scorecard (Kaplan and Norton, 1996), the Service Profit Chain (Heskett et al., 1997), the Res... more ... Scorecard (Kaplan and Norton, 1996), the Service Profit Chain (Heskett et al., 1997), the Results Determinants Framework (Fitzgerald et al., 1991), the Performance Pyramid (Lynch and Cross, 1991), Return on Quality (Rust et al., 1995) the Business Excellence Model (EFQM ...
Abstract Marketing and Management Accounting (MA) have traditionally been seen as poles apart in ... more Abstract Marketing and Management Accounting (MA) have traditionally been seen as poles apart in terms of both focus and approach. Innovative developments in MA measures and increasing pressure on marketers to prove their worth, combined with technological advancements ...
From April 1991 the UK's National Health Service (NHS) has radically changed following the i... more From April 1991 the UK's National Health Service (NHS) has radically changed following the implementation of the January 1989 White Paper 'Working for Patients' which has established a new system of contracts between the purchasers of healthcare and its providers. The ...
ABSTRACT In response to fierce criticism of irrelevancy and the need to adapt management accounti... more ABSTRACT In response to fierce criticism of irrelevancy and the need to adapt management accounting (MA) to fully support modern managerial priorities, there is a growing body of MA literature seeking to address the perceived weakness of customer-focused techniques ...
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