Thomas W. Lin

Invested resource, competitive intellectual capital, and corporate performance

Purpose – On the health care industry, the paper aims to study the effects of intellectual capital, identify using an input‐process‐output concept of human, customer, innovative and process capitals, on company performances.Design/methodology/approach – From a resource‐based and intellectual capital perspective, the structural path model is applied to financial data to analyze the six‐value creation relationships among the four components of intellectual capital, as well as the causal effects of intellectual capital on company performance.Findings – Empirical findings suggest a significant relationship between intellectual capital and company performance. These results also suggest that innovative capacity and process reformation shall be considered first, and through the human value‐added of human capital, firms can improve their companys performance.Originality/value – There have been many arguments as to whether intellectual capital is quantitatively measurable. This paper provides a tangible means of...

Price elasticity of demand and capacity expansion features in an enhanced ABC product-mix decision model

In recent years, activity-based costing (ABC) has become a popular cost and operations management technique to improve the accuracy of firms’ product or service costs in order to help the firms stay competitive. Since the product-mix decision is an important ABC application, most studies in the ABC literature were generally focused on the effect of ABC analysis on the product-mix decision or product cost calculation. However, these studies usually ignored some important factors, such as: capacity expansions, managements degree of control over resources, purchase discount, and change of products price. Hence, in this paper, we consider these factors to propose a more general model. This model can help managers to make a product-mix decision and identify excess resources so that managers can redeploy them to optimise resource usage. Furthermore, since previous studies did not consider the impact of price changes on product-mix decisions, this paper also examines the impact of reducing product price with different price elasticity of demand (ε D) on the simulated companys profit.

The design and implementation of activity‐based costing: A case study of a Taiwanese textile company

Purpose - This paper describes the design and implementation of an activity-based costing (ABC) system for a textile company in Taiwan. Design/methodology/approach - An in-depth field investigation by collecting and analyzing 39 months of field data, gathering information from files and archives, direct observation, interviews, and statistical analyses was conducted. Findings - First, the companys existing cost system adopted a volume-based cost driver to allocate overhead costs to products. While the company devised an “equivalent factor” to take production-complexity into account, the weakness of the metric led to product cost distortions. Second, the existing volume-based cost system ignores the impact of rework processes on product costs. Third, adding complexity-related cost drivers to the volume-based cost driver increases the ability to explain variations in overhead costs. Fourth, the newly designed ABC system incorporates both volume-based and non-volume based drivers, which considers the effect of rework on product costs. Fifth, the existing volume-based cost system overestimates the costs of high-volume products and underestimates the costs of products with high production-complexity. Finally, the company still stays at the analysis phase of the ABC system implementation, possibly due to revision of strategy, no linkage to incentives, lack of MIS support, and inadequate inventory control. Practical implications - The above findings have implications for companies attempting to implement ABC. Originality/value - This paper extends prior research in the following. First, it reports on the entire process of ABC implementation for a given company, as well as facilitators/impediments in the process. Second, while most prior research tends to focus on success cases, our study presents a failure case, which has implications for practitioners trying to avoid the same mistakes.

Integrating activity-based costing and environmental cost accounting systems: a case study

The integration of activity-based costing (ABC) and environmental cost accounting (ECA) systems provides companies with more accurate information to make both well-rounded and effective decisions. The purpose of this study is to propose an effective approach to integrate both ABC and ECA systems. A case study analysing process is used to compare the traditional accounting system and the ABC system for allocating environmental costs. The results enable managers not only to understand financial information regarding the activities for environmental protection and the percentage of environmental costs in the overall product costs but also to make more objective and accurate decisions.

AI integration for enhanced decision support

The topic of integration of artificial intelligence with traditional MIS and DSS has generated interest and attention over the past few years. As applied AI has matured and developed beyond expert systems to include neural nets, genetic algorithms, model based systems, fuzzy logic, natural language and case-based reasoning, the need to provide perspective for the integration of these AI technologies with each other has become an issue of interest and concern. This paper provides a perspective that is problem driven and suggests that AI integration is a matching process of problems/sub-problems with appropriate AI or other problem support technologies which then can be integrated to provide enhanced decision support. AI integration is demonstrated within the context of internal control evaluation where the emphasis is on detecting/preventing financial fraud.<<ETX>>

Stronger Tests Using Heteroscedastic Anova with Simulations of Accounting Systems

SYNOPTIC ABSTRACTAn important problem confronting decision makers is design of computer simulation experiments in settings where the assumptions usually made by statisticians are violated. The usual approach to this problem is to run until the money runs out and hope for the best. The present paper shows how to rationally design and analyze a computer simulation under minimal assumptions, using the Bishop-Dudewicz Heteroscedastic ANOVA (HANOVA) Procedures. This new HANOVA methodology is applied to multiple objective budgeting simulation. It is shown that significant differences, not detected in a previous study, exist between profits under different variance analysis methods. The HANOVA method is also applied to examine inflationary effects on U.S. corporation taxes.

A Cost Variance Investigation Using Belief Functions

Using belief functions, this paper develops a model of the situation of a management team trying to decide if a cost process is in control, or out of control and, thus, in need of investigation. Belief functions allow accounting for uncertainty and information about the cost processes, extending traditional probability theory approaches. The purpose of this paper is to build and investigate the ramifications of that model. In addition, an example is used to illustrate the process.

Standard costing for fuzzy decision support information system: take product mix for an example

Abstract Traditionally, the discussion over standard costing is focusing on: (1) prior control, its purpose is to ensure the cost of production plan to accord with the requirement of cost control, (2) posterior analysis, its purpose is to conduct variance analysis for detecting the causes of unfavorable variance and correcting inefficient process. The success of these two work functions depends on the reasonableness and accuracy of decision-maker’s forecast regarding relative variables. If decision-maker’s forecast is inaccurate, prior control and posterior analysis provides no assistance in reducing decision error. However under an uncertain situation, decision-maker subjectively evaluates and describes the uncertainty, also. provides statement that usually implicates fuzzy factor.Therefore, forecast has become a difficult task. Standard costing and fuzzy theory are consolidated in this study to explain the reason why decision-maker should make standard costing a supporting system in order to improve forecast accuracy. It is found in this study through general corollary that if decision-maker performs forecast under an uncertain situation and fails to make standard costing a supporting system, then: (1)the quantity of product mix will increase or decrease falsely along with the fuzzy tolerance interval defined by decision-maker, moreover, decision-maker may face the risk that he has performed analysis under an unreasonable (or not existed) productivity structure, (2) the value of profit forecast will increase or decrease falsely along with the tolerance interval of fuzzy objective function defined by decision-maker.

AN EXAMINATION OF AUDITOR MULTIPLE CRITERIA JUDGMENTS IN PLANNING INVENTORY AUDIT PROCEDURES

The efficiency and effectiveness of an audit depend primarily on the planned nature and extent of evidence, yet there is little research on how auditors make such complex judgments. This study examines the inventory substantive audit evidential planning judgments of 41 experienced auditors in an experimental setting. The results indicate that auditors displayed strong consensus as to the relative importance of key criteria suggested in the professional auditing literature to weigh evidential alternatives. Specifically, competence was considered of greatest concern, followed by sufficiency and cost of gathering the evidence. The computer-assisted decision aid groups placed greater weight on competency criterion and lesser weight on cost criterion than the judgmental groups. Differences were observed concerning the appropriate allocation of audit time. The computer-assisted decision aid groups assigned more hours to analytical procedures and less hours to other tests than the judgmental groups. Considering the promising cost-effectiveness and the recent trend by many accounting firms towards analytical procedures, the findings here suggest that requiring a computerized decision aid may cause auditors to spend more time on analytical procedures and less time on other categories of audit procedures. Finally, auditors believed the computer-assisted decision aid to be a valuable tool to systematically examine and focus upon important evidence criteria. The decision-aid was also seen as relatively easy to use.

Cost Control and Performance Measurement: A Problem Diagnosis and Some Recommendations for the New Manufacturing Environment

The recent modernization and automation of American factories have created a demand for new cost management systems to make U.S. companies competitive in the world market. This paper summarizes the implications of the changing manufacturing environment on management accounting. It identifies major cost accounting problems in the areas of product costing, cost control and performance measurement. We review the major characteristics of traditional cost systems, such as emphasis on direct labor and unit volume, and contrast those with the current need to control activities that cause overhead costs to be incurred, such as inventory levels, production set-ups, reworks, downtime and other “cost drivers.” Examples are presented on how the widespread practice of allocating overhead costs to products based on direct labor and other volume-related measures can distort product line comparisons and lead to wrong decisions with respect to strategically critical areas such as product costing, performance measurement and sourcing.