A Review of Research on the Theory & Practice of Cost Management
South Asian Journal of Management, Vol. 11, No. 1, pp. 59-95, January-March 2004
37 Pages Posted: 28 Jan 2005
The paper surveys the theory and practice of cost management. The initial developments in activity-based costing, and issues in activity-based costing implementations such as factors influencing its success, degree of interest and adoption, and its relationship with firm value along with case studies are reviewed. The strategic cost management issues such as customer profitability analysis in a value-chain analytic and life cycle costing framework are reviewed. The directions for future research have been suggested. Out of the 53, 26 respondent firms are using activity-based costing for product pricing and operational feedback in Corporate India. The examination of responses conditional on ABCM-adoption revealed that the firms which have adopted ABCM were significantly more successful in capturing accurate cost information for value chain analysis and supply chain analysis vis-a-vis the firms which had not adopted ABC. To have detailed information on value-added and non-value added activities followed by the need to be competitive in the industry in terms of price, quality and performance is the major motivation for the introduction of the activity-based costing in Corporate India.
Keywords: Strategic Cost Management, Target Costing, Value Chain Analysis, Customer Profitability Analysis, Activity-Based Cost Management, ABCM Practices in Indian Industry
JEL Classification: M40, M41
Suggested Citation: Suggested Citation