Provided by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida
1. The first issue is related to whether ABC systems should replace traditional cost allocation systems or be used as separate decision support systems. When is ABC needed to obtain accurate product costs?
2. What are the arguments for using two systems, i.e., using ABC as a separate stand alone decision support system and traditional accounting for external reporting?
3. What are the arguments for using a single integrated cost system?
4. The second issue relates to whether multiple cost or information systems are needed to serve the various audiences summarized in Exhibit 2-4. Do you think any type of accounting system can supply the information required to manage and control processes on a day to day basis? Why?
5. The third issue is related to whether ABC systems can improve a company's competitive position.
Would an ABC system change the management mindset from top down to bottom up, from push to pull, from just-in-case to just-in-time, from constrained optimization to continuous improvement, or from an individualistic to a team oriented organization?
6. Are the implied criticisms of ABC in the question above fair to ABC, i.e., is the purpose of an ABC system to cause any of the changes listed above? Explain.
7. Issue four questions the usefulness of the contribution margin approach which includes direct costing and cost volume profit analysis. From the ABC advocates perspective, what is the criticism related to the concept of fixed and variable costs?
8. How could ABC and the contribution margin approach be combined using Robin Cooper's cost hierarchy? Would this solve the problem related to the previous question?
9. Issue five is whether the standard cost control methodology is useful or detrimental to a company. Is standard costing and standard cost control the same thing? Explain.
10. What does control mean? Does standard cost control qualify as a legitimate control technique? Explain.
11. Can you defend the standard cost control method? Explain how.
12. Issue six questions the usefulness of traditional responsibility accounting. Briefly, what is responsibility accounting?
13. Can authority be delegated? How about responsibility?
14. Relate responsibility accounting to the concepts of individualistic and communitarian or team oriented capitalism. Which system does it fit?
15. What do the critics of responsibility accounting mean when they say communication is exclusively vertical? What is the criticism?
16. To use Ouchi's analogy, how is responsibility accounting like a catfish?
17. What do you think Deming and Goldratt would say about responsibility accounting?
18. Issue seven questions the compatibility of ABC and JIT. Is ABC needed in a JIT system? Explain.
19. How could a company obtain accurate product cost (i.e., first digit correct) in a JIT system without ABC?
20. Is there anything about an ABC system that might promote a push rather than a pull system?
21. Does the answer to the previous question provide another reason to maintain multiple systems, i.e., is this another answer for question 2.
22. Issue eight questions the compatibility between the constrained optimization models and the lean enterprise and whole-system concepts. What is the conflict in this issue?
23. Can a static model be converted into a dynamic model to solve the conflict in the previous question? Explain.
24. Issue nine relates to the conflict between the capital budgeting discounted cash flow techniques and the investment management concept promoted by CAM-I. How is capital budgeting too narrow?
25. What is the moving base line concept?
26. The Deming disciples have a saying. "When the student is ready, the teacher will come". What are they talking about?
* Martin, J. R. 1994. A controversial-issues approach to enhance management accounting education. Journal of Accounting Education
12(1): 59-75. (Summary).