A perspective on accounting for defense contracts

Article Abstract:

The defense industry is unlike any other industry in that its market is typically composed of a single large customer and a small number of product suppliers. The uniqueness of the industry is further illustrated by its extensive use of constantly evolving technology, its multiproduct firms, and its heavy regulation by the government. The combination of these unusual characteristics present tremendous opportunities for the study of accounting. Some of the significant accounting issues that invite investigation are the the kind of accounting appropriate for such an atypical industry, the unusual pressures that must arise from the industry, and the substitute and complement 'instruments' that are working within it.

---

Overhead allocation and incentives for cost minimization in defense procurement

Article Abstract:

Certain features of the current regulatory process encourage defense companies manufacturing a wide variety of products to use wasteful production methods. One of these features is the varying effect of accounting cost on price from product to product. The other feature is the computation method employed by defense companies to arrive at the cost of each product. In combination, these two features serve to promote the use of inefficient manufacturing methods. The first feature induces defense firms to charge costs to well-funded sole source procurements, while the second feature provides these manufacturers with the means to do so.

Cost accounting, Allocation (Accounting)

---

A perspective on accounting for defense contracts

Article Abstract:

The cost-shifting hypothesis proposed by Rogerson (1992) and by Thomas and Tung (1992) in their papers on cost manipulation incentives in defense procurement implied that government contractors may be profitable than other types of business organizations because their commercial operations entail lower costs. The profitability of government contractors was examined using annual data on approximately 9,300 industry segments for the period 1983-1989. It was found that, on the average, government contractors earn 68% to 82% more than noncontractors. This supports the cost-shifting hypothesis.

Similar abstracts:

• Abstracts: The unfolding model of voluntary turnover: a replication and extension. Why People Stay: Using Job Embeddedness To Predict Voluntary Turnonver
• Abstracts: A note on constructing spot price indices to approximate futures prices. Constructing accurate cash settlement indices: the role of index specifications
• Abstracts: Consensus forecasts of financial institutions. part 5
• Abstracts: Senate confirms Clinton cabinet nominees: Bentsen, Aspin, Christopher approved. Clinton draws economic team from Congress, Wall Street; Bentsen, Panetta, Rubin, Altman tapped
• Abstracts: Getting personal. A sudden wrinkle in time carries Tandem's computers back to 1983

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.