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Developing Accurate Costing Systems

25 Pages Posted: 15 Aug 2011  

Christopher S. Chapman

University of Bristol

Anja Kern

Imperial College London

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

Chapman, Christopher S. and Kern, Anja, Developing Accurate Costing Systems (August 15, 2011). AAA 2012 Management Accounting Section (MAS) Meeting Paper. Available at SSRN: or

Christopher S. Chapman (Contact Author)

University of Bristol ( email )

University of Bristol,
Senate House, Tyndall Avenue
Bristol, BS8 ITH
United Kingdom

Anja Kern

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

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