We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
The Activity-Based Cost Hierarchy, Production Policies and Firm Profitability.
- Authors
Ittner, Christopher D.; Larcker, David F.; Randall, Taylor
- Abstract
We examine the descriptive validity and performance consequences of the activity-based cost hierarchy using time series data from a manufacturer of outdoor packs. Principal components analysis of a wide variety of manufacturing measures indicates that these measures generally correspond to the cost hierarchy classifications proposed in the accounting literature. However, many measures related to unit, batch and product-sustaining operations are significantly correlated, reflecting the interdependencies among these operations in this production setting. We find some evidence that measures corresponding to the cost hierarchy classifications explain cost behavior. However, any cost increases from increased unit and product-sustaining activities tended to be offset by revenue increases from higher sales volumes and greater product variety, suggesting that management accounting researchers must consider both cost and revenue implications when assessing the performance consequences of activities corresponding to the cost hierarchy.
- Subjects
ACTIVITY-based costing; COST accounting; ACCOUNTING; PROFITABILITY; FINANCIAL performance; COST
- Publication
Journal of Management Accounting Research, 1997, Vol 9, p143
- ISSN
1049-2127
- Publication type
Article