A Framework for Conducting Numerical Experiments on Cost System Design

45 Pages Posted: 29 Jun 2017 Last revised: 15 Apr 2020

See all articles by Vic Anand

Vic Anand

University of Illinois at Urbana-Champaign - Department of Accountancy

Ramji Balakrishnan

University of Iowa - Department of Accounting

Eva Labro

Kenan-Flagler Business School University of North Carolina

Date Written: November 26, 2017

Abstract

This paper aims to advance the use of numerical experiments to investigate issues that surround the design of cost systems. As with laboratory and field experiments, researchers must decide on the independent variables and their levels, the experimental design, and the dependent variables. Options for dependent and independent variables are ample, as are the ways in which we can model the relations among these variables. We provide a modular framework that provides structure to these variables, their definitions, and the modeling of the connections among them. Further, we offer some insights into the design and layout of output data files, which will allow for easier data analysis. We also present tips on how to report the results from such numerical experiments effectively. Finally, we furnish online the source code in C# for many of these modules. We hope that the framework and guidance provided in this paper will help spur and focus further meaningful work in this important area of management accounting.

Keywords: cost systems, numerical experiments, simulation, managerial accounting

JEL Classification: M41, C62, C63, C99

Suggested Citation

Anand, Vic and Balakrishnan, Ramji and Labro, Eva, A Framework for Conducting Numerical Experiments on Cost System Design (November 26, 2017). Journal of Management Accounting Research 31(1): 41-61. Doi.org/10.2308/jmar-52057 , AAA 2018 Management Accounting Section (MAS) Meeting, Available at SSRN: https://ssrn.com/abstract=2994065 or http://dx.doi.org/10.2139/ssrn.2994065

Vic Anand (Contact Author)

University of Illinois at Urbana-Champaign - Department of Accountancy ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Ramji Balakrishnan

University of Iowa - Department of Accounting ( email )

108 Pappajohn Business Building
Iowa City, IA 52242-1000
United States
319-335-0958 (Phone)
319-335-1956 (Fax)

Eva Labro

Kenan-Flagler Business School University of North Carolina ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States
(919) 962-5747 (Phone)

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