Search

Most studies on cost-based decision-making examine the profit impact of cost reports that rely on different methods to allocate costs. In practice, firms' cost reports often employ the same cost allocation method with subtle variations in the way that the cost data are presented. This paper examines experimentally the profit impact of a cost report's presentation format in relation to a decision maker's level of cost accounting knowledge. Using a customer profitability report prepared using activity-based costing and presented in either a tabular or a graphical format, participants analyze a complex pricing and resource allocation task that affects firm profitability. The results suggest a strong relation between presentation format and cost accounting knowledge. Specifically, decision makers with a low level of cost accounting knowledge attain higher profits when they use a graphical format in comparison to a tabular format. More surprisingly, graphs (versus tables) have an adverse effect on profits for users with a high level of cost knowledge. This result has broad implications: in order to facilitate the decisions of a variety of users of accounting data (e.g. managers, external investors, etc.), firms may need to adapt the presentation format of their accounting data to the level of accounting sophistication of the users.

Byline: JIM MELE With rising rates but tempered expectations, the ongoing freight recovery is unlike any previous cycle, based on fleet responses to a new survey from GE Capital Transportation [...]

Washington -- The Internal Revenue Service was singled out by congressional auditors for slow-footed implementation of federal accounting rules requiring government agencies to implement effective management reporting for cost information. [...]

NAPL (Paramus, NJ) has released the newly updated version of its Budgeted Hourly Cost Study for Sheetfed Press Operations, or Blue Book. The Blue Book demonstrates how hourly rates are [...]

A report from the National Research Council estimates that $120 billion in damages are incurred each year because of premature deaths caused by air pollution from electricity generation, transportation, and industrial and commercial heating. These costs are 'hidden' in the sense that they are not factored into the price of coal or oil or the electricity and gasoline produced.