Article Critique for Product Costing System - myassignmenthelp

Question: Discuss about theArticle Critique for Product Costing System. Answer: Introduction: The main purpose of this study is to identify the factors that explicate the product costing systems content. The study arise from the backdrop that many previous studies have sought out to explain the accounting system diversity by only adopting contingency theory to illustrate how particular elements of accounting system are linked to a range of contextual factors/variables. However, it is surprising that despite the substantial contingency-oriented studies being carried out in relation to management accounting control system (MACS), little attention is given to identify factors explaining the content of product costing system (PCS). It is even further astonishing given the enormous amount of public provided to the development of increasingly sophisticated product costing systems. Summary The main objective of the study was to determine the degree to which potential the contextual factors affect the features of PCS. The method used both adoption/non-adoption of ABC system used in previous studies and alternative proxy measures (APM) for PCS characteristics identification. The alternative proxy measures enabled the author to examine the degree to which various contextual factors dictate the choice of the PCS (Al-Omiri and Drury 2007)). The main findings demonstrate that higher degree of cost system sophistication (CSS) are positively correlated with significance of cost information, degree of use of additional innovative management accounting techniques, competitive environment intensity, size, degree of JIT/lean production techniques usage as well as kind of business sector. No correlation between cost system sophistication and cost structure, diversity of product, IT quality was detected (Al-Omiri and Drury 2007)). Critical Examination The main strength that distinguished this research from the previous is that it provided the potential for testing contextual factors robustness utilizing various proxy measures for identifying PCS characteristics. It has been able to solve the gap in the previous research which has been inconclusive a well as unable to establish the strong connection between adoption of ABC and such contextual factors identified in the literature which remain conducive to ABC system adoption. This method permitted a more robust test of the correlations among predictor variables and CSS unlike previous research to present a more convincing and persuasive research findings supported through evidence explication. However, the researcher was also limited in a number of areas. The questionnaire failed to include a measure of satisfaction linked to satisfaction of respondents with accuracy of assigning the indirect cost to service or products (Al-Omiri and Drury 2007)). The analysis was also biased by inc luding ABC adopters drawn from management consultant firm. This was inappropriate as ABC adoption rate as well as any of contextual factors linked to ABC were likely to be overstated making the finding ungeneralizable based on such variables. The findings must be strictly looked at as offering insights into variables that influence level of CSS in firms incorporated in the study. The findings cannot then be viewed in an identical manner to case studies on the basis of findings generalization. The authors could have improved generalizability by carrying out replication studies anchored on a huge responses number (Drury 2013). Future system needs to emphasize on costing systems at business unit degree. Conclusion: The study has provided extra insights into areas linked to factors that influence the degree of product cost accounting systems sophistication. It has also extended the scope of future study by greatly helping the management accounting students alongside practitioners to effectively understand the management accounting and concepts applicability which are well presented in the article. The study has taken substantial efforts to minimize limitations and mitigate the gap in the past studies. The study gives motivation for researchers to carry out further research in various areas it has highlighted. References: Al-Omiri, M. and Drury, C., 2007. A survey of factors influencing the choice of product costing systems in UK organizations. Management accounting research, 18(4), pp.399-424. Drury, C.M., 2013. Management and cost accounting. Springer.