Is accounting standing in the way of flexible computer-integrated manufacturing?

Article Abstract:

Traditional accounting practices are making it difficult for many companies to justify the implementation of flexible computer-integrated manufacturing (FCIM). Accounting systems have two major functions: relating expenditures to incomes to measure inventory changes, and helping managers make decisions as regards products, costs, and prices in order to improve operations. However, it is often impossible to relate expenditures directly to resulting sales in an FCIM and can offer give little help or the wrong answers to managers making operational decisions. FCIM systems are based on modern processes that include quality, just-in-time delivery, life cycle cost, and the ability to change products rapidly, intangibles that are not easily quantifiable. FCIM systems require accounting systems must identify cost drivers, those activities that cost money. Accounting alternatives may be dual path profit and loss statements with columns for both operating expenses and the uncapitalized costs of strategic planning operations, or cumulative cash flow accounting based on cumulative outlays and cumulative receipts.

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XVENTURE: expert systems to the rescue

Article Abstract:

XVENTURE is an expert system that uses heuristics to solve multidimensional investment justification problems. Traditional methods of justifying investment such as return on investment or discounted cash flow can prevent the adoption of new manufacturing technologies because they set arbitrary hurdle rates, implicitly compare new investments to the status quo, or do not provide complete benefit analysis. XVENTURE is a turnkey expert system that runs on IBM PCs. XVENTURE addresses six investment justification issues: management of investment options for future growth, changes in accounting practices that are required by changes in cost patterns, uncertainties in business conditions and technology, benefits of improved manufacturing capability, and the returns on the proposed investment.

Usage, Expert systems

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Do financial and nonfinancial performance measures have to agree?

Article Abstract:

Traditional cost measurement systems do not adequately portray the output and productivity of the new flexible manufacturing methods, necessitating a change in managerial accounting techniques. Standard costing systems that measure labor efficiency crudely in terms of total output per person, do not consider quality levels, and produces more output than necessary. Managerial accountants can be made more useful by providing the right information at the right time as part of a management control system, by translating financial goals to operating terms, by focusing management attention on those factors that count the most, and by not overemphasizing the accounting function throughout the organization.

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