Use this URL to cite or link to this record in EThOS: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.549433
Title: Cost allocation systems : empirical study in Libyan manufacturing companies
Author: Aboshagor, Jamal Mohamad
Awarding Body: Liverpool John Moores University
Current Institution: Liverpool John Moores University
Date of Award: 2011
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Abstract:
Following the lifting of the sanctions imposed on Libya by the UN in 2003, the need for developing cost allocation systems has become necessary. This includes aspects such as privatization, foreign industries, and competition. All these factors should be considered by the cost and management accounting practitioners of the Libyan industrial sector. Based on the findings of a questionnaire survey, supported by semi-structured interviews, this study has examined the state of cost allocation (CA) systems in terms of product costs of large and medium Libyan manufacturing companies (LMLMCs). A contingency theory approach is adopted and a frame-work is developed in order to investigate the accuracy of the product costs. The study revealed that the majority of the LMLMCs are influenced by the financial accounting mentality. Almost all of them are using simplistic traditional CA methods. A few of them have already contracted to develop (up-date or redesign) their CA system. In fact, almost all of them calculate inaccurate product costs when companies produce various products. The full cost-plus pricing method is rejected by almost all the surveyed companies that face high levels of competition. Instead, they traced the mechanism of market price or comparing product cost with the prevailing market prices. On the other hand, almost all the public companies are facing very low competition which enabled them to adopt the cost-plus pricing method. In contrast, almost all privately-owned companies are facing very high or high levels of competition. In terms of preparing cost information on time, some the LMLMCs do not prepare overhead budgets. Most of them prepare cost information annually and the majorities are preparing cost information in irregular periods. According to the important factors that influence the accuracy of product costs, it was found a strong negative relationship with the level of product diversity and accuracy, a strong negative relationship between the level of intensity of competition and the level of use of cost-plus pricing and a strong negative relationship between the level of ownership and the level of use of the cost-plus pricing method. Finally, the factors that constrict the CA development are as follows; absence of any internal leadership; lack of specialist managerial accountants; lack of top management support; lack of active training programs; centralization of decision-making; it is extremely expensive to develop the CA systems; absence of professional cost or managerial accounting bodies in Libya. With regards to the organization's size factor, lack of financial ability; lack of an independent cost accounting department are important. In relation to the organization's ownership factor, it was found only the low level of competition is important. While most previous studies focused on the implementation of ABC in Western developed countries, this study has contributed further evidence to the value of studying CA systems in terms of product costs with a managerial emphasis in the Libyan context. In addition, this research describes the degree of accuracy and preparing cost information on time. However, it determined contingency factors that restrict the cost allocation system development and influenced the accuracy of product costs in the LMLMCs.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID: uk.bl.ethos.549433  DOI: Not available
Keywords: HF5001 Business ; HF Commerce
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