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Status and Opportunities Associated with Product Costing Strategies in Wood Component Manufacturing

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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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Keywords: activity-based costing; hardwood dimension and components industry; lean accounting; product costing; traditional costing

Document Type: Research Article

Publication date: 2013-12-06

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  • Forest Science is a peer-reviewed journal publishing fundamental and applied research that explores all aspects of natural and social sciences as they apply to the function and management of the forested ecosystems of the world. Topics include silviculture, forest management, biometrics, economics, entomology & pathology, fire & fuels management, forest ecology, genetics & tree improvement, geospatial technologies, harvesting & utilization, landscape ecology, operations research, forest policy, physiology, recreation, social sciences, soils & hydrology, and wildlife management.
    Forest Science is published bimonthly in February, April, June, August, October, and December.

    2016 Impact Factor: 1.782 (Rank 17/64 in forestry)

    Average time from submission to first decision: 62.5 days*
    June 1, 2016 to Feb. 28, 2017

    Also published by SAF:
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