Title: An examination of the factors influencing the inclusion of non-manufacturing overhead costs in product costs

Authors: John A. Brierley

Addresses: Management School, University of Sheffield, Conduit Road, Sheffield S10 1FL, UK

Abstract: Research has not examined the factors influencing the inclusion of non-manufacturing overhead costs in product costs. This paper addresses this deficiency by using the results of questionnaires completed by British management accountants in manufacturing industry to test a logistic regression model of the factors influencing whether or not non-manufacturing overhead costs are included in product costs that are used in decision making. The only significant effect in the logistic regression analysis was for the percentage of non-manufacturing overhead costs to either total costs or total overhead costs, but the result was not in the direction expected. Specifically the smaller the non-manufacturing overhead percentage the more likely were operating units to include non-manufacturing overhead costs in product costs. In addition, there were non-significant effects for the level of competition, product customisation, the influence of financial reporting requirements over product costing and operating unit size, when measured by annual sales revenue or number of employees.

Keywords: non-manufacturing overheads; overhead costs; manufacturing overheads; questionnaire survey; logistic regression analysis; product costs; manufacturing industry; competition level; product customisation; financial reporting; product costing; operating unit size.

DOI: 10.1504/IJMFA.2015.071195

International Journal of Managerial and Financial Accounting, 2015 Vol.7 No.2, pp.134 - 150

Received: 10 Apr 2015
Accepted: 03 May 2015
Published online: 16 Aug 2015 *

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