ABOUT THIS REPORT

Film lovers remember the line from the 1995 movie Apollo 13 when astronaut James Lovell said, “Houston, we have a problem.” He was alerting mission control that there was a technical failure with his crew’s spacecraft that put the success of the mission in jeopardy. Today there is a similar problem with many organizations’ costing practices. There are serious failures with the information that accountants provide to their line managers and executive teams in order to support decision making, and those deficiencies put the success of their organizations in jeopardy.Costing systems, as the name might imply, are the means by which the cost of products and services are measured so that their sale may be profitable. More broadly, they involve cost modeling of an organization’s resources and operations to generate internal decision-support information. This information is useful for managing the performance and profitability of products, service lines, channels, customers, and their supporting processes. Previous studies indicate current costing practices at most organizations are not sufficient in providing decision-useful information to other departments. These studies also show that the high level of dissatisfaction with current costing systems is due to a variety of factors, including a disconnect between an organization’s finance department and other departments in the organization. For example, an accountant may not properly cost or price a good without other factors, such as freight, packaging, and energy expended from factory operations. To help promote the use of improved costing systems, (IMA) Institute of Management Accountants formed a Strategic Cost Management Task Force, with the mission to educate professionals on the benefits of improved costing systems. Since information from costing systems can impact many decisions made by supply chain professionals, their input is needed for improvement of these systems. To obtain such feedback, IMA developed a questionnaire for nonaccounting industry professionals that APICS then distributed to upper management supply chain professionals.