Abstract
Decision-makers of various entities use cost accounting to guide decisions regarding investments,
resource allocations in purchasing and production, marketing strategies and cessation of products
or services. This study sought to provide insight into how users of cost accounting choose and
apply methods to cost products and produce information in aid of making decisions regarding
planning, controlling and performance evaluation.
The study was conducted from an interpretative paradigm and used a case study approach to
explore the evolution of cost accounting methods adopted in the David Brown Santasalo Group
(DBS). Semi-structured interviews were conducted with 13 DBS employees from South Africa, the
UK and Finland. Data was collected on participants’ motivation and thinking behind using and
adapting different cost accounting methods. Both qualitative and quantitative techniques were used
to analyse the data. Content analysis was used to explore and categorise the data.
Correspondence analysis was used to uncover how the region, the employee’s role and level of
experience may impact the adoption of cost accounting methods.
The study revealed that material costs are perceived as the most important aspect of cost
accounting in the gear manufacturing industry representing the largest portion of direct costs.
Labour costs are relatively static within the industry and were therefore perceived to be of lesser
importance in the costing process. The symbiotic relationship among skill, experience and a
bespoke manufacturing environment, not only on the shopfloor, but also in the application costing
methods speaks to skills having a direct influence on the accuracy of cost estimates and allocation
and subsequently the profitability of the firm. The development and continued support of a forwardlooking
costing system including the use of differentiated costing methods and emphasis on makeor-
buy decisions are further opportunities for improvement.
Stakeholders in the gear manufacturing environment should consider the following outcomes from
the study. The symbiotic relationship among skill, experience and bespoke manufacturing reflects
not only on the shopfloor but also in the costing processes with a direct influence on the perceived
profitability resulting from accurate cost estimates and allocation. Furthermore, management is
encouraged to be actively involved in the development and continued support of a forward-looking
costing system. Opportunities for improvement exist in using different costing methods and making
make-or-buy decisions more frequently. Opinions on the fit-for-purpose of various costing
processes are so varied that no reliable correspondence analysis could be conducted. This in itself
signifies how wide-ranging opinions of cost accounting stretch and it is recommended that this be
investigated further. Key words
correspondence analysis, cost accounting, costing methodology, indirect overheads, labour costs,
make-or-buy decision making, management accounting, management accounting change,
management accounting practice, management information, material costs, product costing,
Roethlisberger, semi-structured interviews, skills, strategic management accounting.