Decision Support for Integration of Economic Control and Production

Purpose and goal

The project has studied the effects of different choices of metrics, as tied up capital, and how these affect the estimates of product cost. The project has shown that different calculation principles can result in significantly different product costs, depending on factors as organization and production set-up. As a result, the perceived efficiency of the production will differ notably. The project has lead to a better understanding of how management accounting and production control are related by defining a new framework for product cost estimates, the so-called ´hybrid model´.

Expected results and effects

The project has shown that various factors as manufacturing strategy and production set-up, and how well these match the management accounting principles, can produce quite different indications of a production unit´s performance. The recommendation from the project is to review a production unit´s different parts and then divide them by type of production. This increased understanding facilitates better decision making at companies, which leads to more efficient production. This allows for increased growth as well as competitiveness.

Planned approach and implementation

A literature review was initially conducted Thereafter, a conceptual model with various factors (e.g. production set-up) and management accounting principles, and how these together affect production efficiency, was created. Studies with real data from the company were conducted. Different principles showed different results and varied in how suited they were for application depending on factors such as the company´s organization and the nature of the production. Results from studies on the project have been continuously reported in publications and conference papers.