Abstract

Cost accounting is that branch of accounting which establishes actual cost of operations as well

as budgets, processes, variance analysis, products or departments as well as social utilization of

funds or profitability. In general, cost accounting is utilized for supporting activities related to

decision-making. These are the decisions associated with decrease of an organization’s costs

and improvement in profitability. Cost accounting as a tool of management provides

management with detailed records of the costs relating to products, operations or functions.

There are many more cost accounting techniques which are used for cost determination, control

and analysis purposes. There are certain cost accounting issues associated with the costing

methods and techniques. These methods and techniques have some limitations for some reasons.

These reasons should be sorted out and new methods and techniques should be innovated.

Therefore further research and studies should be conducted for this purpose. Several studies

have already been conducted to evaluate the application of those methods and techniques in our

country. This paper covers some of those important studies and the findings of those studies and

finds out areas for future research.

1. Introduction

Necessity motivates invention. Reduced cash inflow motivates increased emphasis on resource

management. This cause and effect reaction seems fairly universal. It can be observed in

companies facing decreased sales revenue due to increased market competition and in

government organizations facing decreased budget due to reduced borrowing and lower taxes.

Organizations experiencing resource limitations exhibit more interest in resource efficiency than

they did when resources were relatively more plentiful. This is clearly the case now in

government organizations as balanced budgets come closer to reality while calls for further tax

reductions are still heard. Coping with constrained resources will become a way of life for the

foreseeable future.

As cost management practice develops and evolves it seems obvious that cost measurement

systems must also develop and evolve. Many business and government organizations are now

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finding their cost accounting systems inadequate to support the new cost management agenda.

Managing cost requires views of cost not typically required in the past or supported by current

data processing systems. So further studies are needed to resolve those issues relating to current

cost accounting practices.

Cost accounting methods and techniques are of immense importance in both business and

government organizations. Therefore, several studies have been conducted to evaluate the

practice of organizations in applying different costing methods and techniques in our country.

But there is further scope of study in cost accounting practices in Bangladesh.

2. Objective of the paper

The main objective of the paper is to obtain understanding of the articles published in cost

accounting field and analyze their findings in order to explore areas on which further research

can be conducted.

3. Methodology of the study

Information used in this paper has been collected from secondary sources. Information has been

collected from journals published by Institute of Cost and Management Accountant (ICMAB)

and other research papers prepared by cost and management accountants and academicians.

4. Scope of the paper

This paper is mainly a literature review of major cost accounting related articles published by

renowned cost accountants and academicians and finds out probable areas where further studies

can be conducted.

5. Limitations of the paper

This paper is prepared on the basis of secondary data published by ICMAB and other sources.

There is no practical inspection and interviews taken to prepare this paper. To continue the study

it requires a huge time which was not available. To identify probable research areas it requires

practical knowledge in cost accounting. From our textual knowledge, it is quite difficult to

recommend significant areas for further research.

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6. Overview of Published Articles on Cost Accounting and Further

Research Areas

Here are the following areas where the research has already been conducted. We attempt to find

out areas where further research could have been done.

6.1 Total Quality Management

TQM: Quality Cost Dimensions

-Dr. Khawaja Amjad Saeed FCA, FCMA

This paper mainly focuses on the application of TQM in reduction of total cost. According to this

paper, TQM is the crying need to survive in the competitive market. All types of waste are

identified by TQM and management is motivated for its elimination. Through TQM cost of

production can be reduced by following means.

i. Avoiding cost of failure

Zero Defect approach has been encouraged so that genuine quality products are

produced with the first stroke effort.

ii. Benefits through preventive measures approach

Preventive approach should be taken because breakdown maintenance approach in an

organization is very costly.

iii. Savings through reduction in appraisal costs

TQM reduces inspection cost and savings can be diverted to the new product

development.

Future scope of research

This study was conducted to determine the benefits in the implementation of TQM. But this

study did not consider the cost that would be required to implement TQM. Implementation of

TQM requires trained and skilled labors, efficient managers, use of new technology like CAD,

CIM, FMS, improvement of materials, efficient overhead expenses and appointment of qualified

cost and management accountant. This may raise the total cost of production. Therefore an

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organization must consider that benefits of implementing TQM must be greater than its cost. A

study may be conducted which will assess the benefits of TQM on the basis of ‘cost benefit

analysis’.

Cost and Management Accountant’ Perception of Quality Management

- Dr. Md. Abdul Hannan Mia, FCMA

The main objective of this paper was to assess the quality consciousness of the Bangladeshi

CMAs. In this study, it was found that 75% CMAs had incorrect knowledge about products

operating characteristics- a dimension of quality measure and only 25% of them had proper

knowledge on the said dimension of quality. So from the research it was found that Bangladeshi

CMA s’ concern for TQM was not totally perfect. This paper suggested some measures to

improve the current situation. Attempt should be made to increase the perceptions about

performance features reliability, conformance, durability, serviceability, aesthetics and perceived

quality among the respective persons. To enhance the quality modern operation management

practices have to be introduced to both manufacturing and service organizations. To improve the

quality of the goods and services, the CMAs in our local organization should also have to be

utilized several specific tools and techniques such as benchmarking, outsourcing, statistical

quality control etc. can be used. Employee involvement should be enhanced. Quality of imputes

such as materials, laborer etc. used in production should be improved. New forms of technology

like CAD, CAM, CIM, FMS should be used.

Future scope of research

These studies assessed the quality perception of managers of manufacturing companies only. A

research can be conducted to know the quality perception of the mangers of trading and service-

oriented industries in Bangladesh.

These studies only include mid and top-level managers but their quality perception was not

studied won the basis of the level of management. Thus a study can be conducted to identify the

difference of quality perception of the managers at different levels.

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A study can be designed to assess the perception of quality of the male and female managers

because gender wise quality perception was not studied.

A study can be designed to identify the factors affecting the quality perception of managers

working in different environment. A study can be designed to assess the quality perception of

CMAs working in public, government and autonomous enterprises because this study was

conducted on the CMAs working in private companies.

Manufacturing Strategy Focusing on QCD for Sugar Industry in Bangladesh

- A. K. M. Delwar Hussain, FCMA

This paper highlights the extent of QCD (Quality, Cost and Delivery) practice in the fifteen sugar

mills controlled by Bangladesh Sugar and Food Industries Corporation. In this paper, a number

of problems encountered in proper implementation QCD has been identified and also a number

of ways has been suggested how the sugar mills can improve the existing QCD practice.

QCD stands for ‘quality, cost and delivery. Assuming profit-making, the ultimate goal of a

company, is self-evident, the next ‘superordinate’ goals of the company are taken as quality, cost

and delivery. Without achieving these cross-functional goals, the company will be left behind by

the competition because of inferior quality.

Problems in the implementation of QCD in sugar mills of Bangladesh

a) Lack of knowledge and practices regarding company-wide quality control is the fundament

problem for implementing QCD in all the sugar mills of the country.

b) Want of customer focus, safety, environment, team building, employee involvement and lack

of proper knowledge and techniques for the process of cost reduction.

c) Lack of common culture on QCD and QCD language and also the gap between knowledge

and experiences of product quality and customer service seem to be another problem which

constrains quality improvement in the country.

d) Absence of TQM concept and practices to the process of production.

e) Lack of proper ideas in group activities on QCD.

f) Want of people-centered culture on QCD and managerial capabilities.

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Ways to improve QCD in sugar mills of Bangladesh

a) Developing commitment at all levels on QCD;

b) Setting-up and implementing the quality system;

c) Customizing versus maintaining prescribed uniformity;

d) Using the quality system as a management tool;

e) Considering customer as business partner;

f) Trying to achieve global quality performance for improving customer services;

g) Having Government policies to support customer services.

Future Research Scope

This study is based only on sugar industries. Further studies can be conducted on other

manufacturing industries of Bangladesh such as cement, pharmaceutical, food, textile and other

industries.

Further studies can be conducted on QCD in service-oriented industry such as banking, telecom

etc.

Further studies can be conducted to assess the benefits of QCD on the basis of cost-benefit

analysis.

Cost of quality in the manufacturing environment

The focus on quality is not just another passing fad rather it is said that a business without quality

products or services will not survive in the global marketplace. According to Eanst & Young

quality is the most important critical success factor. The emphasis on quality must continue

because the competition continues to raise the ante. Such as Japanese manufacturers raises the

quality expectations for auto bodies by reducing variation through the continuous improvement

process.

Traditional quality concepts: quality is a complex construct involving several attributes & is

defined simply as conformance to design specifications. The design specifications consist

generally of a nominal or target value & tolerance top accommodate process variation of some

critical parameter or characteristics. Tolerance often is specified by an upper specification limit

& lower specification limit. Parts or products whose critical measurements fall within the USL &

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LSL are considered acceptable & those with measurements above or below these limits are

considered unacceptable.

Contemporary quality cost concepts:

Contemporary quality cost systems are based on the research of JURAN, MASER, and

CROSBY .They divided the basics of quality cost types into prevention appraisal & failure.

Appraisal costs:

Appraisal costs are the amounts spent on inspection, testing & sampling of inputs, outputs&

work-in-process. It includes expenses for overhead as well as inspection.

Internal failure costs: Internal failure costs-all scrap & rework cost are incurred to the dispose

of or fix defective products before they are shipped to the customer.

External failure costs: External failure costs are incurred due to product failure after the product

is delivered to the customer. Generally external failure costs include costs of warranty, field

service, product recall, product liability & loss odd sale to customer dissatisfaction.

Problems of contemporary quality cost concepts: Jurans model suggests that the optimal level

of quality cost occurs at less than 100% conformance. The model depicts an increasingly steeper

appraisal & prevention cost curve that is an application of classical economic theory of

diminishing marginal returns relative to the reduction in defective output. It is best to consider

appraisal & prevention costs separately because they have very different cost behavior &

implications for cost control.

Prevention cost behavior:

Most japanese & a few American companies have established a system for detecting quickly &

tracing every problem by its root cause. One the cause has been discovered the company takes

steps to ensure that the problem does not recur.

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Taguchi Approach:

Under the pass/fail Juran cost of quality model, all products are considered good units are

assigned equal value for quality even though one product may fail just while another may match

failure costs. It shows a minimal quality loss when products have their characteristics equal to

the target values.

6.2 Absorption costing and Variable costing

An evaluation of variable costing and its Uses in Manufacturing Organizations:

-Md. Saiful Alam, ACMA.

Variable costing is a extremely valuable tool in planning and controlling operations in big firms.

In variable costing, product costs include only those manufacturing costs which are closely

related as product costs. Thus variable costing is used for internal reporting purpose for

managerial decision making purpose, product pricing, and control tool. As under absorption

costing net income will tend to vary with production because the deferred fixed cost in the

inventory. Yet many companies use variable costing for internal reporting to reduce the

undesirable incentives to build up inventories that absorption costing can create .

Further study can be done on:

A study can be done on how variable costing helps CVP analysis. A Variable Costing, tool for

management decision and performance evaluation. How variable costing can be used to reduce

the undesirable incentives to build up inventories that absorption costing can create.

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Absorption Costing vs. Direct Costing In Historical Perspective: Need for a Synthesis

Dr. Dilip Kumar Sen, Swapan Kumar Bala, ACMA, A.N.M. Shareef, Mohammed Abul Hossain

The history of cost accounting shows a controversy continues to exist as to which of the two

costing methods: “absorption costing” and “direct costing” is more useful for decision making

purposes and for reporting to the users of accounting information. Under direct costing fixed

manufacturing cost should be released against revenues immediately in total, while under

absorption costing manufacturing cost should be released against revenues bit by bit as units of

product are sold. Any units of products not sold under absorption costing resulted in fixed cost

being inventoried and carried forward as assets to the next period. A controversy about

absorption costing and direct costing is the definition of assets. Assets are resources controlled

by the entity that generate future economic benefits. Assets should be recorded at cost price.

Since fixed costs comprise parts of the cost of production, advocates of absorption costing argue

that inventories should be valued at its full cost of production. On the other hand advocates of

direct costing argues that fixed cost component of product may not provide future economic

benefit as fixed manufacturing cost during the current period will not prevent to have been

occurred in the future period. Absorption costing includes both fixed and variable manufacturing

costs as product cost whereas direct costing considers only variable costs as product cost. So

allocation of fixed cost into the current period bring about distortion in the income statements of

both the current period and the subsequent period as fixed costs are related to specific periods

and not to actual volume of production. the absorption costing school advocated and promoted

the use of supplementary managerial tools such as flexible budgets and break-even charts to

provide a more realistic picture to management of the effects of changing volume upon costs and

profits. Taking a particular decision is facilitated if one knows which of the cost will remain

unchanged if the decision is adopted and which will vary. Under absorption costing pro-rata

distribution of all costs- variable and fixed is done between finished goods sold and goods held

in stock, finished or unfinished. This means fixed costs which are a function of single time

period are apportioned over different time periods. The situation can be described by giving a

numerical example where there are 12000 units of goods produced, 3000 units of goods are sold.

Under absorption costing the entity shows a profit of taka 31000 whereas under direct costing a

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loss of taka 23000. This is because of shifting a large portion of fixed manufacturing cost to the

next year through assigning it on under absorption costing.

The comment by J.N. Harris is noteworthy:

“ a manufacturing company cannot realize a profit unless its products have been sold. It can not

make a profit merely by producing goods for inventory (vide Brown 1983, p 151)

6.3 Activity Based Costing (ABC) System

Organizational views to implement ABC system in Bangladesh

Mohammad Tariq Hasan and Shammi Akter

Due to increased automation, new management practices like Just-In-Time (JIT) and Total

Quality Management (TQM) have to be implemented by the management. In order to maintain

competitive advantages, world class companies have increasingly adopted new strategies and

more complex costing systems such as Activity Based Costing (ABC). But in our country this

type of costing system has limited use in the majority of the companies due to lack of top

management support.

Further study can be done:

A study can be done on how Activity Based Costing helps product pricing and product mixing

decision. Also cost reduction and process improvement and design decisions by using ABC

system.

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Beyond ABC: Target costing for Profit Enhancement

John M.Brauxch, CMA

Published: July-August 1996

Target costing is a strategic management tool that seeks to reduce a product’s cost over its

lifetime. Its application in Japan has been well documented, but American firms can also use it to

understand cost better and to enhance long-term profitability. One American firm recently

implemented target costing, and the results have exceeded the firm’s expectation. The target cost

is the price the customers are willing to pay for a product less the profit we must receive for

making that same product. The difference between the two becomes our product cost. It is the

cost at which we must produce an item in the long run.

Changing the corporate mindset: Our philosophy was simple: the cost management is one

of the most strategically imperative areas of the firm. It combines the efforts of marketing,

operations and accounting and presumes a relationship with and working knowledge of each to

be successful.

Three strategies: in the article three strategies have been discussed. He also identified two

school management thought emerged: the accuracy school and strategy school. On one common

issue they both agreed that management accounting system must be separate from financial

accounting systems.

Strategy 1: recognizing differences between managerial accounting and financial

accounting: managerial accounting is considered to be a subset of financial accounting.

financial accounting’s edicts result in both the processes and the people involved and a corporate

dictum to make the numbers look good. Many firms do no cost accounting or management

accounting. Another difficulty management accountants must overcome has to do with financial

accounting numbers.

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Strategy 2: Accurate costing

The accuracy school of thought is concerned with accurate product costs. We began our cost

effort firmly in this camp. According to CEO’s of the firm, our mission is to get product costs as

close to actual as possible. Although this goal may sound simplistic, achieving it is not easy. We

know the costs were accurate in the aggregate. That is the budgeted cost and actual costs were

closely related.

Strategy 3: going from the accuracy school to target costing

Costing products accurately is a worthy work. Accurate product costing does little to prove the

firm’s strategic position and does nothing to reduce costs. Reporting the same costs accurately

was not as important to us using cost management to make more money for our firm. The

accuracy suggests that cost management can be needed to meet predefined strategic goals

intrinsic to cost management.

Applying target costing: with target costing the pricing decisions become the focal point of

our efforts not the product cost. In the article the information was readily available because our

product’s perceived value is easily determined based on the look of the product. In many

organizations the information is not so available. The focus is more external in lowering cost to

meet customer demand. Our second focus is profit plan.

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6.4 Current Cost and Management Accounting Practices

State of Cost Accountancy Sector In Bangladesh (January-february, 2005)

-Al-Haj Md. Matior Rahman,FCMA

Summary

The independent India enacted her Companies’ Act 1956 and thereby repealed the colonial

Indian Companies’ Act 1913. Pakistan enacted her own Companies’ Ordinance as late as in

1984. Bangladesh was late by a further decade to enact her Companies Act in 1994. Until the

enactment of their own Companies laws both Pakistan and were following companies act 1913

which had however, been repealed in India as early as in 1956, Even though the initial

Companies act 1956 of India did not contain any mandatory provision relating coat accounts and

for audit of cost accounts. But Pakistan and Bangladesh while enacting their company’s laws

also made it obligatory for certain companies engaged in manufacturing and processing etc to

keep their accounts and to get their cost accounts audited by professionally qualified cost and

Management Accountants.

In November 1997 the government enacted the Cost Audit (Report) Rules 1997 and in January,

2005 made some amendments thereto to specify 1, the information that must be carried out by

the Cost Auditors’ Reports and 2, the forms and contents of the books of Cost accounts that must

be maintained by the companies who are under obligation, as per Companies Act 1994, to

maintain cost accounting records.

Cost Accounting as Practiced in Bangladesh.

In sugar mills the entire process of sugar manufacturing from procurement of sugar-cane

to shipment of bagged sugar to the whole seller each stages’ cost and related information

are kept properly.

In Jute Mills, product-wise actual cost of each product at each process is accumulated

and compared with budgeted cost of each product for each process for each product every

month.

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In the cotton mills also the production cost centers and service cost centers are well

identified and product wise monthly account for each cost centers is prepared for

comparison of actual with monthly budget.

In natural gas fertilizer factory the entire process of producing urea fertilizer is

accumulated and compared with budgeted cost of each cost centers every month.

In shipping industries, in addition to service and utilities cost centers, the shipyard or

dockyard is divided into a number of workshop e.g. docking, planter-shop which are

considered as production cost centers and cost is accumulated in respect of each cost

centers for each job e.g. each new ship built, each ship repaired etc.

Strategic Management Accounting Practices in the 21St Century

-Prof. Md. Abdul Hannan Mia

Prof. Faruq Ahmed

Accounting that records financial transaction and reports financial information usually deals with

past information having less contribution in strategic decision making than those of future related

relevant information. Strategic management is facing, future courses of action including the

vision of the enterprises, depth of the problems. This discipline is problem, customer, market,

decision and activity oriented. The practice of management accounting paves the way of making

strategic decisions that focuses on the aforesaid dimensions and will provide best information in

relation to competitors, customers or market conformity.

Strategic Management Accounting Tools in practice

For the sake of competitive advantages management accountants are using a number of

sophisticated tools for cost efficiency and effectiveness. These budgeting techniques and tools,

variance analysis, variable costing, standard costing, CVP analysis, ratio analysis etc. these tools

are more internal focused.

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Activity Based Costing (ABC): unlike traditional accountants, management accountants-strategic

transformational leaders are practicing costing method based on activities that is designed and

used to provide managers with cost information for strategic and other decisions that potentially

affect capacity and therefore fixed costs known as ABC.

Activity Based Management (ABM): Management by activities identifies the area that the

organization needs to improve up to greater possible improvement by eliminating unnecessary

activities and related costs.

Environmental Management Accounting (EMA): EMA is the generation and analysis of both

financial and non financial information in order to support internal environmental management

processes. The major areas for the application forEMA are the assessment of annual

environmental costs/expenditure, product pricing, budgeting, investment appraisal, calculating

costs and savings of environmental projects, or setting quantified performance targets.

Balance Scorecard: An integrated set of performance measures that are derived from the

company’s strategy and support the company’s strategy throughout the organization. It can be

characterized by the process of converting the strategy to performance measures like financial,

customer, internal business processes, and a learning and growth.

Areas of Management Accounting Practices

Change management: Management accountants have to understand the strategic and financial

objectives to imitate and implement these changes. Designing and implementing new iseas tat

call for redesigning the existing managerial policies and practices known as change management.

Managing Coordination: Management accountants being the transformational managers need

to work with marketing, production and other relevant executives to evaluate production and

price review decisions and also the management of production, marketing and sales budgets etc.

New Product Development (NPD): The management accountant has a key role to play in the

NPD process, a vital strategic area for all organizations. This involves their ability to look

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forward; developing ideas, transplanting the ideas in a profitable manner into innovations.NPD

affects all parts of value chain.

Profitability Analysis: Management Accountants are using higher statistical and operational

management model like linear programming, simulation queuing thery, dynamic programming,

game theory to grasp the opportunity of the environment.

Fight Competition: The Management Accountants have strategies to fight completion in the

competitive market. The main weapon for fighting competition is competitive advantages.

Competitive advantages can be achieved only when customers convince that firm’s product or

service offers superior value.

Corporate Social Responsibility: Corporate environment reporting as practiced by the

accountants is also opening new avenues including an increase in corporate image.

The Remaining Areas That can be covered by Management Accountants

Management Accountant being the change agent of the practices in the organization must

visualize the opportunities and threats of the environment to equip themselves to avail the

competitive advantages. For this they need to extend their role, understanding, and capabilities.

Implementation of modern management control system in Bangladesh: Managers’

Attitude, Knowledge and Organizational Environment

Prof. Syed Mohammad Ather, FCMA, Mohammad Harisur Rahman, Md. Aftab Uddin.

Due to globalization, survival is a matter of competitiveness which depends on productivity, cost

effectiveness and quality. The application of Total Quality Management (TQM), Just In Time

(JIT), Computer Integrated Manufacturing (CIM), and Decision Support System (DSS) as

modern management control system is very limited in Bangladesh. But using these modern

management control system, competitiveness can be achieved by improving the quality of the

product, productivity of organization and achievement of cost effectiveness and efficiency. The

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application of modern management control system is ultimately dependent on management

attitude knowledge and organizational environment.

Further study can be done on:

Employee behavior towards management control system and evaluation of performance of

management regarding effective use of management control system. Benefits on using

management control system in an organization in order to achieve competitiveness.

The need for relevance in Management Accounting

Dr. Peter J. Clarke

Recently the relevance of management accounting has been subject to a number of sustained and

severe criticism. The criticisms are: the traditional method of absorbing overheads into products

(using direct labor hours) actually distort product costs, management accounting is too

preoccupied financial measures of performance.

These problems can be reduced by strategic management accounting and contains three main

aspects: (1) Environmental scanning (2) competitor analysis (3) Looking at internal data

Environmental scanning: Environmental scanning refers to scanning of the factors of both

external and internal environment of the business that may have an effect on the operation of the

entity. External factors may comprise legal, economic, financial, social, political and

demographic issues etc. Internal factors may comprise technological, technical, manpower,

management philosophy, strategies etc. In the context of environmental scanning the

management accountant need to collect and analyze market information. The information is

necessary since different phases of life cycle e.g. growth, maturity or decline can affect the

success of different strategies e.g. build, hold, harvest or divest.

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Competitor analysis: It’s an important tool of strategic management to analysis the

competitor’s information. To survive in the market, an entity must analysis it’s competitors.

Competitor analysis includes competitor cost analysis. Without knowledge of relative competitor

costs , the company does not know whom to attack nor how vulnerable it is. There are a lot of

sources of information in relation to competitors as follows:

Mutual customers

Own sales force

Industry journals and government statistics

Trade exhibitions and physical analysis of competitor’s products

Newspaper articles and press release

Strategic perspective on internal data: strategic management accounting also looks at the

long term implications of internally generated information. By reduction of short-term

profitability due to actions undertaken to build market share and secure relative cost advantage ,

future improvements in profit performance may be enhanced.

It may be concluded here that management should be concerned not only with the internal

performance but also with the external performance about the company’s operating environment.

The proposal to introduce strategic management is not a subtle device to provide a role for

unwanted or unemployed accountants.

Cost Control and Cost Reduction in the light of Product Pricing: A Study of the

Pharmaceutical Firms in Bangladesh

- Dr. Milan Kumar Bhattacharjee

The main focus of the paper is to identify the tools and techniques of cost control and cost

reduction used by the pharmaceutical firms of Bangladesh in relation to product pricing decision.

The study reveals that the pharmaceutical firms of Bangladesh use various techniques of cost

control and cost reduction to keep the cost of products with in a particular limit. The study also

reveals that pharmaceutical product pricing is determined on the basis of mark-up pricing

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system. But the proposal for fixing the product prices at less than mark-up prices cannot be

ignored. The only difficulty in this case is perhaps the problem of estimation of cost for pricing

purposes. The study suggests that good cost information along with the imposition of cost

control and cost reduction methodologies may be considered to be the way out for fixing prices

on the basis of minimum cost. In that connection, the introduction of a flexible budgeting system

having fixed and variable rate may be considered.

Future Scope of Study

Cost control and cost reduction relating to product planning will perhaps be of little significance

if proper application of the different elements of costs cannot be made in relation to product

pricing. So a study on cost control and cost reduction in the light of product pricing along with

cost allocation may be conducted in future.

This study is based on pharmaceutical industry. Further studies can be conducted on other

manufacturing industries of Bangladesh.

7. Findings

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From the overview of the published articles on cost accounting in Bangladesh it is clear that

there is a plenty of scope to research further in this area. We find following areas on which

research should be conducted.

i. Most of the research is based on manufacturing industries. But there has been little

research on cost accounting practices in the service oriented industries like telecom

industry.

ii. In the manufacturing industry more research on the effectiveness of process costing

system should be conducted.

iii. Now-a-days, automation increased in the production process. Its impact on the

costing of the manufacturing organizations may be a potential area of research.

iv. Further research may be conducted on valuation of intangible assets and intellectual

property.

v. Further research may be taken place on allocation of support-department costs,

common costs, and revenues.

vi. Further research may be taken place on feasibility of Just In Time (JIT) Management

system in our country. Feasibility of backflush costing can be studied further.

vii. Studies on joint product costing methods and byproduct costing methods should be

conducted. Especially feasibility of multiplicative and additive joint cost model in

our country should be studied.

viii. Further research should be conducted on challenges in administering budgets.

ix. Further research should be conducted on evaluating the feasibility of flexible budget.

x. Further research on product mix decisions with capacity constraints can be done.

xi. A research on the impact of time horizon on pricing decisions can be done.

xii. Feasibility of target costing in the business organizations can be studied.

8. Conclusion

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The need to manage cost in organizations with constrained resources is clear. Managerial cost

measurement is a prerequisite to cost management. Different managerial accounting approaches

are used within cost accounting. They include lean accounting, activity-based accounting,

standard or standardized cost accounting, throughput accounting, resource consumption

accounting and cost-volume-profit analysis or marginal costing.

Despite the benefits arising from different techniques of cost accounting, there are several cost

accounting issues also. For instance, the method of historical costs is subject to criticism because

it only considers acquisition cost of a particular asset. Moreover, the method fails to recognize

the present market value. Besides this, the method focuses on allocation of costs and not on the

value of asset. Apart from these, a major drawback of this method is related to inflation.

There are several cost accounting issues associated with other techniques. The method of

marginal costs also suffers from certain limitations because it utilizes historical data while the

decisions taken by the management are associated with future events. Moreover, it fails to

recognize that fixed costs might become variable over a longer time-period.

Apart from the specific issues, there are several general cost accounting issues. Accountants are

not able to estimate the price of assets at their present values. Moreover, manipulations are still

present in the books of accounts. Besides this, the accounting standards vary from business to

business.

Above discussion indicates to the fact that cost accounting methods and techniques is subject to

change because business environment is always changing. Therefore professionals and

academicians should always try to come with new theories and models to solve the complex

problems of cost accounting and evaluate the existing methods in order to ensure the

effectiveness of the decisions taken on the basis of cost accounting information. But in our

country however there is not sufficient research studies conducted on cost accounting. Therefore

further research studies should be conducted on cost accounting in order to ensure the efficiency

and effectiveness of the management.

Reference

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a. Horngren, Charles T.; Sundem, Gary L.; Stratton, William O.; Burgstahler, David;

Schatzberg, Jeff- Introduction to Management Accounting, 14th edition ( PHI Learning

Private Limited).

b. Horngren, Charles T.; Datar, Srikant M.; Foster, George; Rajan, Madhav; Ittner,

Christopher-Cost Accounting A Managerial Emphasis, 13th edition ( Prentice-Hall of

India Private Limited).

c. Polimeni, Ralph S.; Fabozzi, Frank J.; Adelberg, Arthur H.; Kole, Michael A.- Cost

Accounting Concepts and Applications for managerial decision making, 3rd edition

( McGraw-Hill Inc.)

d. Research Articles published in ICMAB journal.

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