read horngren’s cost accounting online

read horngren’s cost accounting online

The Evolution and Impact of Horngren’s Cost Accounting: A Comprehensive Analysis

1. Introduction to Horngren’s Cost Accounting

In this article, we seek to quantify the role Horngren’s Cost Accounting has played in educational practices and content evolution by answering the following research question: What has been the impact of Horngren’s Cost Accounting on accounting education in the United States? Educational practices take into account the frequency and length that H has been used in accounting programs over time, while the content evolution investigates cost accounting aspects such as terminology, product costing, cost allocation issues, customer and internal reporting, service costs, and behavioral implications of the costs. We compare H’s ranking with the accounting programs offered to business undergraduates. Our ranking is based on a two-stage peer nomination survey. We conclude with directions for future research.

Firm-level decision-making serves as the basis for studying costs. Identification, measurement, and analysis are applied to both production and administrative functions within the entity. Analysis of such decisions involves an understanding of cost concepts and the influences affecting cost behavior. Various product cost and managerial decision-making issues are examined with emphasis given to cost accumulation systems. Horngren’s Cost Accounting, perhaps more than any other accounting text, has had a major impact on cost accounting practices.

2. Key Concepts and Theories in Horngren’s Cost Accounting

Understanding Benchmarking is essential to success in many industries today, particularly those characterized by high levels of customer-driven quality and service. Benchmarking can help evaluate customer opinions, organizational capabilities, and operational processes. The levels of excellence in these fields can be used to guide the setting of strategic targets. The best sources of benchmarking data can include world records, quality leaders, winners of quality awards, best-in-class companies, competitors, customers, suppliers, and manufacturing plants and commercial operations in other parts of the corporation. Hearing the views of competitors and key customers and suppliers can provide valuable insights. Competitive benchmarking is the cornerstone of continuous improvement. It has provided a framework and impetus for capturing the hearts and minds of the company and key stakeholders. The application of benchmarking at the strategic, business unit, operational, and stakeholder levels strengthens competitive advantage, enhances organizational performance, and builds long-term wealth for key stakeholders. Understanding Benchmarking is particularly important for upper-level manager as the information provided can help establish long-term organizational strategies.

Cost accounting is inherently interdisciplinary – drawing on concepts from financial accounting, managerial accounting, economics, and management theory. Understanding these concepts and theories as they have evolved in Horngren’s Cost Accounting can be a challenge. To help clarify Horngren’s treatment of these critical issues, this section presents a comprehensive guide to the many financial accounting, managerial accounting, and multidisciplinary concepts and theories that are reflected in Horngren’s text. After a brief description of financial accounting, seven key concepts in managerial accounting are considered: organizational alignment, cost management, customer orientation, production orientation, benchmarking, continuous improvement, and just-in-time. The chapter concludes with a discussion of the multidisciplinary coverage in Horngren’s text. A brief analysis of the development of the managerial accounting concepts and theories presented in the chapter follows definitions of Horngren’s Cost Accounting.

3. Practical Applications and Case Studies

Nearly one hundred Chinese universities use Horngren as their sole or core reference for cost and management accounting teaching. The increasing number of mainland students attending business schools around the world who are well-versed in the content and concepts of Horngren provides significant opportunities for them to benefit from professional business certification programs regardless of their location. Moreover, using Horngren’s content for advising problems not only in the classroom but also in the workplace means sharing teaching frameworks between generations, who would benefit the most from each other across the globe. Researchers who consider interviews, discussions, levels of social negotiation, targeting, and training arrangements involving young people would also find that Horngren offers comprehensive coverage of the concerns expressed.

One doctor in the respiratory health branch of the Centers for Disease Control and Prevention in the U.S. found that the work of Joseph Juran and Horngren was done to help them manage workplace exposures among tin miners in Malaysia. The basic thinking about costs in business was the same for miners as for the software engineers and health scientists at this high technology agency. In the case of the Occupational Safety and Health Administration (OSHA), Peer Advisors Beamon and Starnes could use the explain/apply/analyze results offered in Horngren to encourage open discussion and participation among agency employees. Those practical applications of teaching through case studies based on textual support in Horngren facilitate hands-on team presence in corporate training sessions around expectations for different scenarios. Horngren’s book is regularly used as one of the referencing standards for hybrid approach professional courses within the United Kingdom.

4. Critiques and Future Directions

The rapid social and economic changes currently underway are expected to continue. A shift in demand function characteristics such as the intensity and organizational complexity of production will result and models currently serving as the basis for management accounting curricula are likely to be inadequate for the production- and social-oriented problems anticipated. If the accounting profession does not update its approach to teaching management accounting concepts, it places at risk its role as educator and expert provider of management accounting information. Desiring that others, both within and outside of business education, assume this responsibility is a shortsighted approach. The college business curriculum is a major determinant of the way tomorrow’s corporate managers will perceive and resolve complex social issues which are the direct consequence of their operating decisions. Economics and social changes, such as energy problems, environmental issues, and world food supply uncertainties, co-occupy positions in the current business milieu. Upon separation and restructuring of their financing and operational functions, these broad world issues will become direct obligations of corporate management. Only by understanding the production and operational tasks of the firm, the accounting task of management, and by presenting these problems in a realistic format can business educators address their responsibility for effectively preparing tomorrow’s corporate managers.

This is a critical juncture in the history of cost accounting. Those with a stake in the development of the management accounting curriculum are under pressure to define the essential body of knowledge that should be required coursework for all graduate students. This paper has focused on one of the current options for beginning this process: a professionally oriented corporate management and control, cost management project. The appropriateness of the accounting profession making this move has been discussed and the historical development of management accounting courses is reviewed. A basic prerequisite to designing and including such a course is agreement on the body of knowledge. Management accounting concepts evolve in response to demands for information which are functions of the production-orientation, and the social and economic environment in which firms operate. Insight into the current state of management accounting has been gained from a review of its academic literature and the views of its professional counterparts. For students to acquire the appropriate body of knowledge while in graduate school, it will be necessary to reexamine the current approach to developing case requirements and integrating them into the core curriculum.

5. Conclusion and Implications for the Field

That is, while appreciating that detailed accounting information can be quite costly to develop, prepare, and compile, the relatively low-cost environment of our present technology, and the extensive use of computerized information and information processing systems, coupled with extensive information availability through such systems, should promise that whatever information we need and require can be obtained on a much more timely basis. Said differently, with no reflection on the information benefits of innovations in cost accounting information, the challenge facing information users is not the information or information system, it is actually in understanding and utilizing such information, and certainly not prejudicially, particularly the more sophisticated and complex forms of cost accounting information. Thus, the future of accounting information is rarely found in the further commodification of more sophisticated forms of such information. Rather, the future is in its ever more sophisticated production and, in the case of users, well-informed consumption.

The field of cost accounting (or management accounting) that has evolved over the past several thousand years, and particularly over the past several centuries, has not yet appeared to have achieved a state of “mature evolution” or “completed transformation,” which almost seems to be a contradiction of terms. In other words, the discipline, knowledge, and practice of cost accounting is quite mature yet, seemingly, still very substantially incomplete. It has moved and evolved over quite a number of stages having been practiced for literally millennia. It is sometimes difficult to say that the practice and discipline of cost accounting as it is performed and utilized today are substantially different from the practices and level of knowledge that developed hundreds of thousands of years ago.