Computing and Library Services - delivering an inspiring information environment

Explicating the design of overhead absorption procedures in UK organisations

Drury, Colin and Tayles, M. (2005) Explicating the design of overhead absorption procedures in UK organisations. British accounting review, 37 (1). pp. 47-84. ISSN 0890-8389

[img] PDF
Restricted to Registered users only

Download (300kB)


This paper reports the findings of a postal questionnaire survey that examines the extent to which potential explanatory factors influence the level of complexity of product costing system design choices in UK companies. It is argued that because previous surveys have sought to classify costing systems by two discrete alternatives, either traditional or ABC systems, they do not adequately capture the diversity of practices that exist. The distinguishing feature of this paper is that it adopts a broader perspective and examines cost system design choices that vary along a continuum ranging from very simplistic to highly complex costing systems.

Item Type: Article
Additional Information: UoA 35 (Accounting and Finance) © 2004 Elsevier Ltd. All rights reserved.
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HG Finance
Schools: The Business School
The Business School > Financial Ethics and Governance Research Group
Related URLs:

Abernathy, M.A., Lillis, A.M., Brownell, P., Carter, P., 2001. Product diversity and costing system design: field
study evidence. Management Accounting Research 12 (3), 261–280.
Abrahamson, E., Rosenkopf, 1993. Institutional and competitive bandwagons: using mathematical modelling as a
tool to explore innovation diffusion. Academy of Management Review 18, 487–517.
Aiken, M., Hage, J., 1971. The organic organization and innovation. Sociology 5, 63–82.
Bjornenak, T., 1997. Diffusion and accounting: the case of ABC in Norway. Management Accounting Research 8
(1), 3–17.
Blau, J.R., McKinley, W., 1979. Idea, complexity and innovation. Administrative Science Quarterly 24, 200–219.
Booth, P., Giacobbe, F., 1998. Predicting the adoption of activity-based costing in Australian manufacturing
firms. Paper presented at the 21st Annual Congress of the European Accounting Association, Antwerp.
Brierley, J.A., Cowton, C.J., Drury, C., 2001. Research into product costing practice: a European perspective. The
European Accounting Review 10 (2), 215–256.
Bright, J., Davies, R.E., Downes, C.A., Sweeting, R.C., 1992. The deployment of costing techniques and
practices: a UK study. Management Accounting 3 (3 (September)), 201–212.
Bruns Jr.., W.J., Kaplan, R.S., 1987. Accounting and Management: Field Study Perspectives. Harvard Business
School Press pp. 97–118.
Bryman, A., Cramer, D., 1999. Quantitative Data Analysis: A Guide for Social Scientists, Routledge 1999.
Cagwin, D., Bouwman, M.J., 2002. The association between activity-based costing and improvement in financial
performance. Management Accounting Research 13 (1), 1–39.
Chenhall, R.H., 2003. Management control system design within its organizational context: findings
from contingency-based research and directions for the future. Accounting, Organizations and Society 28,
Clarke, P.J., Thorley Hill, N., Stevens, K., 1999. Activity-based costing in Ireland: barriers to, and opportunities
for change. Critical Perspectives in Accounting 10, 443–468.
Cooper, R., 1988a. The rise of activity-based costing—part two: when do i need an activity-based cost system?
Journal of Cost Management 1988, 41–48.
Cooper, R., 1988b. The rise of activity-based costing-part three: how many cost drivers do you need, and how do
you select them?. Journal of Cost Management for the Manufacturing Industry 1988;, 34–46.
Cooper, R., 1990. Explicating the logic of ABC. Management Accounting 1990;, 58–60.
Cooper, R., Kaplan, R.S., 1992. Activity based systems: measuring the costs of resource usage, Accounting
Horizons 1992 pp. 1–13.
Cooper, R.B., Zmud, R.W., 1990. Information technology implementation research: a technological diffusion
approach. Management Science 36 (2), 123–139.
Damanpour, F., 1992. Organizational size and innovation. Organization Studies 13 (3), 375–402.
Datar, S.M., Gupta, M., 1994. Aggregation, specification and measurement errors in product costing. The
Accounting Review 69, 567–592.
Dewar, R.D., Dutton, J.E., 1986. The adoption of radical and incremental innovations: an empirical analysis.
Management Science 32, 1422–1433.
DiMaggio, P.J., Powell, W.W., 1983. The iron cage revisited: institutional isomorphism and collective rationality
in organizational fields. American Sociological Review 48, 147–160.
Drury, C., Tayles, M., 1994. Product costing in UK manufacturing organisations. The European Accounting
Review 3 (3), 443–469.
Dugdale, D., Jones, T.C., 1997. How many companies use ABC for stock valuation? A comment on Innes and
Mitchell’s questionnaire findings. Management Accounting Research 8 (2), 233–240.
Estrin, T.L., Kantor, J., Albers, D., 1994. Is ABC suitable for your company?. Management Accounting 1994;,
Ettlie, J.E., Bridges, W.P., O’Keefe, R.D., 1984. Organizational strategy and structural differences for radical
versus incremental innovation. Management Science 30, 682–695.
Fisher, J., 1995. Contingency-based research on management control systems: categorization by level of
complexity. Journal of Accounting Literature 14, 24–53.
Foster, G., Swenson, D.W., 1997. Measuring the success of activity-based cost management and its determinants.
Journal of Management Accounting Research 9, 109–142.
Friedman, A.L., Lyne, S.R., 1995. Activity-based Techniques: the Real Life Consequences. Chartered Institute of
Management Accountants.
Gordon, L.A., Silvester, 1999. Stock market reactions to activity-based costing adoptions. Journal of Accounting
and Public Policy 18 (3), 229–251.
Gosselin, M., 1997. The effect of strategy and organizational structure on the adoption and implementation of
activity-based costing. Accounting, Organizations and Society 22 (2), 105–122.
Guilding, C., 1999. Competitor-focused accounting: an explanatory note. Accounting, Organizations and Society
24, 413–426.
Guilding, C., McManus, L., 2002. The incidence, perceived merit and antecedents of customer accounting: an
explanatory note. Accounting, Organizations and Society 27 (1), 45–59.
Hair, J.F., Anderson, R.E., Tatham, R.L., Black, W.G., 1998. Multivariate Data Analysis, Fifthed. Prentice-Hall,
Englewood Cliffs, NJ.
Hoque, Z., 2000a. Just-in-time production, automation, cost allocation practices and importance of cost
information: an empirical investigation in New Zealand-based manufacturing organizations. British
Accounting Review 32 (2), 133–159.
Hoque, Z., 2000b. Linking balanced-scorecard measures to size and market factors: impact on organizational
performance. Journal of Management Accounting Research 12, 1–18.
Innes, J., Mitchell, F., 1990. The process of change in management accounting: some field study evidence.
Management Accounting Research 1 (1), 3–19.
Innes, J., Mitchell, F., 1995. A survey of activity-based costing in the UK’s largest companies. Management
Accounting Research 1995;, 137–154.
Innes, J., Mitchell, F., Sinclear, D., 2000. Activity-based costing in the UK’s largest companies: a comparison of
1994 and 1999 survey results. Management Accounting Research 11 (3), 349–362.
Johnson, H.T., Kaplan, R.S., 1987. Relevance Lost: The Rise and Fall of Management Accounting. Harvard
Business School Press.
Kaplan, R.S., 1990. Contribution margin analysis: no longer relevant. Journal of Management Accounting
Research (USA) 1990;, 2–15.
Kaplan, R.S., Cooper, R., 1998. Cost and Effect: Using Integrated Systems to Drive Profitability and
Performance. Harvard Business School Press.
Kaplan, R.S., Norton, D.P., 1996. Using the Balanced Scorecard as a Strategic Management System. Harvard
Business Review 1996;, 75–85.
Kennedy, T., Affleck-Graves, J., 2001. The impact of activity-based costing techniques on firm performance.
Journal of Management Accounting Research (USA) 13, 19–46.
Khandwalla, P.N., 1972. The effects of different types of competition on the use of management controls. Journal
of Accounting Research 1972;, 275–285.
Kimberly, J.R., Evanisko, M.R., 1981. Organizational innovation: the influence of individual, organizational, and
contextual factors on hospital adoption of technological and administrative innovations. Academy of
Management Journal 24, 689–713.
Krumwiede, K.R., 1998. The implementation stages of activity-based costing and the impact of contextual and
organizational factors. Journal of Management Accounting Research 10, 239–278.
Lawrence, P., Lorsch, J., 1967. Organization and Environment. Irwin, Homewood, IL.
Libby, T., Waterhouse, J.H., 1996. Predicting change in management accounting systems. Journal of
Management Accounting Research 8, 137–150.
Lukka, K., Granlund, M., 2002. The fragmented communication structure within the accounting academia: the
case of activity-based costing genres. Accounting, Organizations and Society 27, 165–190.
Maher, M.W., Marais, M.L., 1998. A field study on the limitations of activity-based costing when resources are
provided on a joint and indivisible basis. Journal of Accounting Research 36, 129–142.
Malmi, T., 1997. Towards explaining activity-costing failure: accounting and control in a decentralized
organization. Management Accounting Research 8 (4), 459–480.
Malmi, T., 1999. Activity-based costing diffusion across organizations: an exploratory empirical analysis of
Finnish firms. Accounting, Organizations and Society 20, 649–672.
McGowan, A.S., Klammer, T.P., 1997. Satisfaction with activity-based cost management. Journal of
Management Accounting Research 9, 217–238.
Miles, J., Shelvin, M., 2001. Applying Regression and Correlation. Sage, Beverly Hills, CA.
Moores, K., Chenhall, R.C., 1994. Framework and MAS evidence, in: Moores, K., Booth, P. (Eds.), Strategic
Management Accounting: Australian Cases. Wiley, Brisbane, pp. 12–26.
Nord, W.R., Tucker, S., 1987. Implementing Routine and Radical Innovation. Lexington Books, Lexington, MA.
Noreen, E.W., 1991. Conditions under which activity-based cost systems provide relevant costs. Journal of
Management Accounting Research 3, 159–168.
Norusis, M.J., 2000. SPSSw 10.0 Guide to Data Analysis. Prentice-Hall, Englewood Cliffs, NJ.
Perrow, C., 1970. Organizational analysis: a sociological view. California Wadsworth Publishing Company.
Shields, M.D., 1995. An empirical analysis of firms implementation experiences with activity-based costing.
Journal of Management Accounting Research 7, 148–166.
Shields, M.D., 1997. Research in management accounting by North Americans in the 1990’s. Journal of
Management Accounting Research 9, 3–62.
Simons, R., 1990. The role of management control systems in creating competitive advantage: new perspectives.
Accounting, Organizations and Society 15 (1/2), 127–143.
Swenson, D., 1995. The benefits of activity-based cost management to the manufacturing industry. Journal of
Management Accounting Research 7, 161–180.
Woodward, J., 1965. Industrial Organization: Theory and Practice. Oxford University Press, London.
Yahya-Zadeh, M., 1997. Potential design flaws in ABC systems and suggested safeguards. Journal of Applied
Business Research 13, 9–19.

Depositing User: Sara Taylor
Date Deposited: 22 Feb 2007
Last Modified: 20 Aug 2015 16:55


Downloads per month over past year

Repository Staff Only: item control page

View Item View Item

University of Huddersfield, Queensgate, Huddersfield, HD1 3DH Copyright and Disclaimer All rights reserved ©