Cost Management Practices in India: An Empirical Study
ASCI Journal of Management, Vol. 33, Nos. 1-2, pp. 1-13, 2004
Posted: 5 Aug 2005
The present study of 53 CFOs of corporate India captures the development in the cost management practices such as accounting for overheads, applications of budgetary control and standard costing. It addition to traditional cost management techniques it also deals with applications of contemporary management tools such as activity-based costing. The hypotheses in general deal with the difference in the practices across sectors, stages, and level of adoption of contemporary cost management techniques.
The firms are successful in capturing accurate cost and profit information from their ABC cost systems for value chain and supply chain analysis. The results suggest that the firms have better insight for benchmarking and budgeting with ABC cost system yet the consistency in their priority of budget goals is lacking unlike the firms who are using traditional costing systems. However both the ABC and traditional cost system users have clarity of reasons for effective implementations of planning and budgeting process in their organizations. There is no significant difference in the application of standard costing between the ABC-users and the traditional costing system users. This implies that the use of activity-based cost systems and standard costing is not mutually exclusive. There is a widespread use of sales variances and material variances vis-a-vis labor and overheads cost variances.
Keywords: Cost Management, Standard Costing, Activity-Based Costing, Overheads
JEL Classification: M4, M40
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