An examination of the types of cost system used to obtain product costs in British manufacturing industry

Kaplan has argued that a single accounting system should not be used to calculate product costs for use in decision making because it is not possible for a single system to satisfy the three different purposes of costs systems. Instead, he has suggested that operating units should use three separate systems to satisfy each of the three purposes or a database system from which information can be extracted to satisfy each purpose. This paper uses the results of 259 useable questionnaire responses and 55 interviews with British management accountants to examine which types of cost system are used to obtain product costs in British manufacturing industry and why these cost systems are used. The results reveal that single, separate and database systems are used to obtain product costs, with single systems being the most popular. Single systems are used for historical reasons and appear heavily institutionalised in British manufacturing industry. Although separate and database system are used they are not significantly different from single systems. The implication of this is that costs calculated using these two types of system might not satisfy the three different purposes of cost systems.