25 Pages Posted: 15 Aug 2011
Date Written: August 15, 2011
Developing accurate cost systems is not only a technical, but also an organizational challenge, as it requires taking into account the knowledge of non-accountants. However we know very little about this process of how cost systems are made more accurate in practice. This study, reporting the results from a field study undertaken in a UK Hospital, makes two main contributions: Firstly, we suggest that reducing the total error through trade-off or off-setting effects misses an essential point, even if it may reduce the total error. Errors are not only sources to improve accurateness of costs but also play a positive role in the management of efficiency. Secondly, we find that there is a recursive process of making cost systems more accurate. We identify that this process is on-going without necessarily converging on an optimal end-state of error level. This understanding has significant implications for designers and users of costing systems.
Keywords: costs system design, errors, process
Suggested Citation: Suggested Citation
Chapman, Christopher S. and Kern, Anja, Developing Accurate Costing Systems (August 15, 2011). AAA 2012 Management Accounting Section (MAS) Meeting Paper. Available at SSRN: https://ssrn.com/abstract=1909979 or http://dx.doi.org/10.2139/ssrn.1909979