Status and Opportunities Associated with Product Costing Strategies in Wood Component Manufacturing
Product costing systems are critically important for businesses because they help reduce costs, price products at competitive prices, and enable strategic decisionmaking. This article reports the results of a survey designed to collect information about practices used by the North American hardwood dimension and components industry to calculate the cost of their products. Among other things, the study examined the type and reliability of cost accounting and product costing systems used by the industry, the purpose of the systems used currently versus an envisioned “perfect” system, problems associated with current systems, and ideas for costing system improvements. Results showed that two-thirds of respondents' companies are using traditional costing methods, whereas one-third are applying more modern costing practices, such as activity-based costing or lean accounting. The five main uses of cost accounting systems reported by respondents are 1) financial reporting, 2) tax reporting, 3) inventory valuation, 4) product costing, and 5) target costing. The most common problems associated with current product costing systems are missing links to management initiatives, lack of resources, lack of interfaces with enterprise software, failure to understand the three uses of costing systems (financial, operational, and strategic), and lack of costing data.
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Document Type: Research Article
Publication date: 2013-12-06
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