The Compensating Impact of Strategic Cost Drivers: Evidence from the U.s. Banking Industry
نویسندگان
چکیده
Based on case studies of several firms, accounting researchers have argued that traditional costing systems constructed using volume-related drivers understate the true costs of variety and other non-volume drivers. As a result, managers do not have appropriate information to make optimal tradeoffs between the costs and benefits of such strategic cost drivers. This supposed distortion in optimally equating managerial cost and revenue impacts when selecting the cost driver level makes the economic case for activity-based costing. However, there is little formal empirical evidence to support that claim. This paper examines the cost and benefit impacts of non-volume drivers using data from the banking industry. Empirical results document that scale, scope and complexity drivers impact both revenues and costs in predictable ways. More importantly, the revenue and cost impacts are found to be, in fact, compensating for most cost drivers
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