Life with a sub-contractor: New technology and management accounting

Abstract

The kind of new technology that has been installed in advanced industrial production at an increasing rate over the last few years sets a new stage for the development of management accounting. Flexibility makes extreme adaptation of production to meet customer demands possible. Mass production of individualized products makes product costing problematic. Control of operation has to be decentralized while the design of production systems has to be centralized. The function and use of a traditional management accounting system should be questioned. What are the important issues that prompt industries to install new technology in the first place? Is it flexibility or is it quality that is the prime mover? Is it both? Or might it be efficiency? Whatever the case may be, it is necessary to clarify trade-offs between aspects of the new production facilities. Causal links between activities and costs have to be reestablished. The simple relations between volume and costs are no longer valid. This paper deals with these issues against a background of current research on local information needs in automated industrial production and a solution linking local and central systems is proposed.