Adaptive Cost Accounting Control: Issues in Realizing Deming Synergy

  •  Mohamed Gaber    
  •  Edward Lusk    


We report on a consultation addressing the re-configuration of a Standards Cost Accounting System of a major MNC. We identified two fundamental theoretical issues pertinent to this re-configuration: Their Standards Cost Accounting [SCA] System was (1) not adaptive within their control time frame, and (2) the holistic systemic protocols espoused by W. Edwards Deming were not used to condition the decision-making framework addressing control. We developed an adaptive Decision Support System [SCA:DSS] that offered the following integrated systemic features: (i) The SCA:DSS is parametrized using the Marketing/Sales sub-budget as approved by corporate-level management and (ii) is used to set the control standards for direct Materials & Labor costs and ABC related allocations, (iii) A detailed interactive profiling of production activity is produced at a time when adaptive corrective actions would still be reasonably possible, and (iv)  Adaptive: Best, Stasis and Corrective Action Cases regarding the effect of these corrective actions on the contribution margin are displayed. However, even given the adaptive design features and the explicit designs to effect holistic integration over the pilot division and the central headquarters of the firm, the SCA: DSS failed to be implemented. We offer valuable insights into this failure-to-launch that may be indispensable in effecting a synergetic environment where adaptive holistic cost control may be realized. In this paper all of the technical functionalities of the SCA: DSS are detailed and a working illustration is provided. The SCA: DSS is offered as a free download without restrictions to its use.

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