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Developing Accurate Costing Systems

Christopher S. Chapman

University of Bristol

Anja Kern

Imperial College London

August 15, 2011

AAA 2012 Management Accounting Section (MAS) Meeting Paper

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.

Number of Pages in PDF File: 25

Keywords: costs system design, errors, process

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Date posted: August 15, 2011  

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

Contact Information

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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References:  35