Cost Accounting Techniques Adopted by Manufacturing and Service Industry within the Last Decade

Abstract

The purpose of this study is to review the literature on cost accounting techniques being practiced by manufacturing and service industry within the last decade. Virtually all techniques that are appropriate for manufacturing companies are also appropriate for service companies. However, the most common techniques in manufacturing companies include Just in Time (JIT), Activity Based Costing (ABC), Target Costing, Life Cycle Costing, Throughput Accounting and Kaizen costing while Activity Based Costing is the most commonly used technique in Service sector. However, Activity Based Costing, Budgetary, Control, Cost Volume profit analysis, and standard costing are common to both manufacturing and service sectors.  In contrast to the postulations of many academic authors that the traditional techniques have lost relevance and should be discontinued, this review shows that traditional techniques including the heavily criticized Standard Costing, Absorption Costing and Marginal Costing were still used frequently by many companies within the last decade. The modern costing techniques used frequently within last decades include; Just in Time principle, Activity Based Costing, Target Costing, Life Cycle Costing , Kaizen Costing and Throughput Accounting. The usage of the techniques depends on the situation on the ground, that is, the level of technological advancement, the size of the company, organizational culture and stage of the product.