Title: The uses of product costs in decision-making

Authors: John A. Brierley

Addresses: Management School, University of Sheffield, 9 Mappin Street, Sheffield, S1 4DT, UK

Abstract: This paper assess the use of product costs in decision-making. Using questionnaire responses and interviews with British management accountants, product costs are used all the time in decision making to support the profit motive in profit/investment centres and to control costs in cost centres. They are used only sometimes in decision making when there are limitations in the product costing system and/or the market has a greater role in decision-making. Operating units use product costs as attention directing information in decision making: to highlight loss making products for special studies to identify any further information required, because market-based information has an important role in decision making and when product costs are not accurate enough to use directly in decision-making. Operating units use product costs directly in decision making because they have confidence in the accuracy of costs or because of ignorance of using the information as attention directing information.

Keywords: questionnaire survey; interviews; product costs; decision making; frequency of use; use directly; attention directing information; management accounting; profit motive; cost control.

DOI: 10.1504/IJMFA.2013.058551

International Journal of Managerial and Financial Accounting, 2013 Vol.5 No.3, pp.294 - 309

Published online: 21 Oct 2014 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article