Five Modern Management Accounting Myths
Title of the article: Five Modern Management Accounting Myths
Author: German Boer
Purpose pf the article:
This is an article about 5 myths in management accountings. The author, German Boer has proposed that with the new development and the time changes the way people doing businesses; management accountants have been following the latest fads to study the operations of the company. The myths consist of:
1. Labor cost used to be too high
2. True and accurate costs result from better calculations
3. Product cost determines product price
4. Modern manufacturing has made conventional costing obsolete
5. Overhead has increased dramatically in recent years
Summarize Article
1. Labor cost used to be too high
First of all, let us take a look at first myth. According to the author, he has given several examples showing that the labor cost is not a major proportion of manufacturing cost. He believed that modern manufacturing has not made a tremendous decline or increase in labor cost as a percentage. Also, the author mentioned that not to equalize the direct labor and production labor. The percentage of labor cost varies depending on the industry.
2. True and accurate costs result from better calculations
The second myth the author proposed is true and accurate
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