Colin Drury’s research while affiliated with University of Huddersfield and other places

This paper uses the results of a questionnaire survey to conduct exploratory research into the importance of product costs in decision-making. The results of the research reveal that product costs are at least important in selling price, make-or-buy, cost reduction, product design, evaluating new production process and product discontinuation decisions. Product costs that were used directly in decision-making were more important than those that were used as attention directing information and they were more important in product mix, output level and product discontinuation decisions in continuous production processes manufacturing. In general, the importance of product costs in decision-making did not vary between the methods used to allocate and assign overheads to product costs, and it was not related to operating unit size, product differentiation, competition and the level of satisfaction with the product costing system.

There has been criticism of the use of budgeted capacity as the denominator of overhead rates. Prior questionnaire-based research has analysed which type of capacity is used in the denominator of overhead rates, but it has not assessed why these capacity levels are used. This paper uses grounded theory techniques to analyse 50 interviews with British management accountants about why a particular capacity level is used to determine the denominator of overhead rates. The results reveal that budgeted capacity is used because the calculation of the denominator is regarded as part of the budgeting process. Practical capacity and normal capacity are used to ensure that products are not under or overcosted.

There has been little recent empirical research which has examined the application of costs in make-or-buy decisions. This paper presents the results of a questionnaire survey with 256 British management accountants and interviews with 55 of them that gather evidence about the application of costs in make-or-buy decisions. The results of the questionnaire show that, in general, direct, manufacturing or total costs or some combination thereof are used in make-or-buy decisions. The interviews showed that in some cases that costs may be used inappropriately when the costs include allocated and assigned overheads and this might lead to sub-optimal decisions.

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.

Purpose – This paper has two specific objectives: to appraise the relative importance of cost‐plus pricing and to develop and test hypotheses concerned with contingent factors that might affect the degree of importance attached to cost‐plus pricing. Design/methodology/approach – Data were collected via a mailed survey of UK and Australian companies. Tests were applied and non‐response bias was not a threat to the validity of the findings. Findings – A relatively high degree of importance attached to cost‐plus pricing is noted, although there appears to be a substantial number of companies that use cost‐plus pricing for a relatively small sub‐set of products and services. Companies confronted by high competition intensity attach relatively high degrees of importance to cost‐plus pricing and manufacturing companies attach a relatively low degree of importance to cost‐plus pricing. Originality/value – The paper makes a contribution, given that only two empirical studies with a specific focus on cost‐plus pricing were revealed in a literature search covering the last two decades. Additionally, little has been done to investigate the contingent factors affecting the application of cost‐plus pricing. The significant role played by competition intensity in connection with accounting system design is observed to be one of the more enduring relationships uncovered by management accounting research. But a somewhat perplexing aspect of this study concerns the failure to find a statistically significant positive relationship between company size and cost‐plus pricing.

Companies are paying increasing attention to outsourcing components and processes. In most of today's business environments the decision to outsource has many ramifications, not least the impact on capital budgets. On the one hand, the decision to outsource releases capital that can be used elsewhere. On the other, the decision to continue in-house keeps open strategic options for the product in question, but has knock-on effects due to the reduction in capital. However most companies separate the process of making capital allocations from the purchasing function. This paper examines how one company moved to a position where purchasing was integrated with top functions, especially capital budgeting. It achieved this by working off the strategic sourcing model described in this paper.

Reports the findings of a pilot survey into how product costs are calculated and how they are used in decision making in manufacturing industry in the UK. The survey examines how many accounting systems firms use, blanket overhead rates in product costing; the bases used to calculate overhead rates; the application of product costs in decision making; and profitability maps. The results show that a variety of methods are used to calculate product costs and that they are used to a significant extent in decision making.

This paper summarizes and reviews research of product costing practice in Europe. The review considers research into how many accounting systems firms use, product cost structures, the use of blanket overhead rates in product costing, the bases used to calculate overhead rates, the application of product costs in decision making and product pricing, and the use of activity-based costing. Although significant progress has been made over the last decade in describing costing practices in Europe, further work remains to be done. Having identified gaps in, and questions arising from, previous research, the paper concludes with recommendations for future research.

According to Johnson and Kaplan one of the major factors that has contributed to the lost relevance of management accounting is management accounting becoming subservient to the demands of financial accounting. Johnson and Kaplan's claim is based mainly on anecdotal evidence and little research has been conducted on whether management accounting information differs from that which is necessary for meeting external financial reporting requirements. This paper reports on the findings of a postal questionnaire survey relating to the management accounting practices in UK manufacturing organizations. In particular, attention is focused on discussing the implications arising from the survey relating to those specific areas of management accounting where conventional wisdom suggests that internal information requirements ought to differ from those that are necessary for external financial reporting.

Surveys of capital budgeting practices in the UK and USA reveal a trend towards the increased use of more sophisticated investment appraisals requiring the application of discounted cash flow (DCF) techniques. Several writers, however, have claimed that companies are underinvesting because they misapply or misinterpret DCF techniques. Such claims have been made on the basis of observations in only a few companies, or anecdotal evidence, without any supporting statistical evidence. Reports on a recent survey conducted by the authors which suggests that many UK firms are guilty of misapplying DCF techniques. Also provides evidence relating to some issues that have not been thoroughly examined in previous studies, namely the impact of company size and the relative importance that firms attach to different investment appraisal techniques.