The new cost management/management accounting: more questions than answers

Article Abstract:

The new philosophies of cost and managerial accounting for manufacturing industries were developed on the realization that fixed costs had increased and direct labor had decreased, and that the only variable costs of consequence remaining for many manufacturing firms were direct materials and energy. This realization of the importance of fixed costs led to a greater emphasis on the assignment of fixed costs to products based on measures of activity other than direct labor. The term 'cost drivers' came into vogue in the new cost and managerial accounting literature as a means to trace costs to products, but cost driver is a substitute for the old term 'measure of activity'. Many questions on the integration of life cycle costing into the new cost and managerial accounting philosophy remain, and important considerations managerial accountants should keep in mind include: accounting analyses are rarely exact; regulatory requirements should not dictate the method of accounting analyses; and year-to-year mandates on profitability relate more to portfolios of products than to individual products.

Methods

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Deferred taxes and consolidations - a case for change

Article Abstract:

Deferred taxes arise when corporations depreciate assets using one method for financial purposes and another method for tax reporting purposes. Since these deferred taxes relate to differences in the timing of the recognition of gain (without affecting the total depreciation), deferred taxes should, in theory, disappear as depreciation schedules run out. However, recent studies indicate that most corporations have devised ways of increasing the amount of deferred taxes carried on the books from one year to the next. Because these deferred taxes continue to grow (and to remain unpaid, in a net sense), perhaps deferred taxes should not be treated as liabilities and would more fairly be accounted for as equity. These topics are discussed, using the tax reporting and financial reporting of General Electric and General Electric Credit Corp. as examples.

Analysis, Case studies, Laws, regulations and rules, Tax accounting, Accounting and auditing, General Electric Co., Financial statements, General Electric Capital Corp., Deferred tax (Accounting)

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Cost/management accounting: the 21st century paradigm

Article Abstract:

Four management-accounting paradigms have been developed since the turn of the century. The first paradigm, which dominated from the 1900s until the 1940s, is largely concerned with engineering-driven standard costs. The second paradigm, which emerged during the 1940s and widely accepted until the 1980s, focused on cost-volume-profit analysis and direct costing. The third paradigm, which dominated in the late 1980s and the early 1990s, emphasized activity-based costing. The last paradigm marks the era of market-driven standard costs. For the 21st century, it seems that another paradigm will likely emerge. This would be a combination of the third and fourth paradigm. Another possible scenario is a combination of the third and fourth paradigm, with some elements of the second paradigm thrown in.

Models, Cover Story

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