A survey of the literature on cost system design

A survey of the literature on cost system design

A survey of the literature on cost system design

1.Introduction

Johnson and Kaplan coined the term "Relevance Lost" in 1987 to characterise the progression of system design in Management Accounting Practices (MAPs) through various stages of development and stagnation. They went on to say that by 1925, all of the MAPs that are still in use today had been produced. How may methods that were developed in a very different setting still be useful today? They are not valid in reality; instead, they provide businesses with false and irrelevant data on which to base their judgments. They came to the conclusion that old costing techniques were unable to cope with the changing business environment, which included increased competition, advances in information and manufacturing technologies, and other factors (Nodast et al., 2015). These developments caused businesses to rethink how they use cost data for various objectives, putting a greater emphasis on quality, efficiency, and customer value rather than the previously dominant financial requirements.

Since the publication of Johnson and Kaplan in 1987, a significant body of literature has focused on closing the research-practice gap by introducing more improved costing systems to improve information quality and use purpose-appropriate cost information in various contexts (Kaplan & Anderson, 2004; Gervais et al., 2010; Perkins & Stovall, 2011; Al-Qady & Jones, 2016; Perevi & Hladika, 2016). Activity Based Costing (ABC), Time Driven Activity Based Costing (TDABC), and Resource Consumption Accounting are examples of such systems (RCA). The changing nature of cost systems emphasises the importance of contextual factors on the usefulness of cost data. Cost systems, in particular, have progressed from giving historical, infrequent, and inaccurate cost information to predictive, frequent, and more accurate cost information that is more suited to managerial demands. This means that the cost system's design should be linked to various managerial goals in order to give value-added data that can be used to improve performance.

The evaluation of Cost Systems Design (CSD) to be able to measure its functionality and ability to meet managerial needs in various scenarios has yielded inconclusive results in the literature (Al-Omiri & Drury, 2007; Van Triest & El shahat, 2007; Cohen & Kaimenaki, 2011; Pike et al, 2011). Comparing different systems is challenging because to the lack of ability to quantify CSD functionality. As a result, the cost accounting literature called for numerous views for measuring CSD aspects or features that allow for the evaluation of such systems' performance. The applicability of cost system design is critical; companies want to know how much money they will save by investing in more complex cost systems. It would be regarded a waste of resources if the design of more elaborate cost systems is not justified by greater performance or a better "fit" with the surrounding context.

Unfortunately, there are no common measurements or proxies for measuring CSD functionality across studies and situations; as a result, the process of accumulating knowledge is seen to be difficult (Bromwich & Scapens, 2016). This necessitates additional research in order to define appropriate evaluative criteria for various pricing systems, as well as to investigate the differing effects of various contextual elements on CSD. To the best of the researchers' knowledge, the relationship between CSD and other contextual elements is still a rich research subject, given the ever-changing corporate environment (Hutchinson, 2010). Furthermore, due to the availability of a range of alternate forms and associated notions that were either theoretically developed or generated from practise, the literature on CSD is fragmented and inconclusive.

The need for more detailed research on cost system functionality and exploring the impact of numerous contextual elements on cost system design choices has been raised in earlier studies, prompting this review (Abernethy et al., 2001; Pizzini, 2006; Pavlatos & Paggios, 2009; Schoute, 2009; Bromwich & Scapens, 2016; Messner, 2016; Kuzey et al., 2019). More specifically, the construct of cost system functionality has been defined and examined from many perspectives and circumstances. As a result, the goal of this study is to find, understand, and synthesise significant material on CSD functionality in a more integrated manner across various contexts. This study will not be a systematic evaluation of all linked literature, nor will it use statistical approaches such as meta-analysis to find patterns, disagreements, or links that may exist in the literature chosen. Instead, a qualitative review of the literature covering relevant papers reporting empirical results (quantitative and qualitative) published in various accounting journals between 1987 and 2020 would be conducted with the goal of analysing and evaluating how CSD functionality measurement has changed over time as a result of different relationships with various contextual factors.

Unlike earlier research on cost accounting systems, this study concentrates on the many measures of CSD functionality in general rather than a specific cost accounting system. Furthermore, rather than relying on research findings from other connected domains such as management information systems or management control systems, the examined publications will only include relevant studies dealing to CSD in various contexts (Al-Omiri & Drury, 2007). Cost accounting systems are considered a subset of Management Accounting and Control Systems (MACS), which explains why different studies in the literature employ the same evidence. Because different systems have different functions and thus diverse impacts on performance, evidence from these disciplines cannot be directly utilised to justify specific cost system design decisions.

The major goal of this work is to evaluate existing CSD research in order to analyse and synthesise available information about CSD functionality in various scenarios. A review of the literature would emphasise the strengths and limits of existing research, as well as identify potential research gaps and suggest future study possibilities. Furthermore, a review of prior research would reveal the gaps between what is previously known about CSD and what is truly needed to be learned, whether on an academic or practical level.

This review would attempt to answer the following questions:

•  What are the measures or proxies used to evaluate CSD performance in the literature?

•  What are the contextual factors studied in relation to CSD in the literature?

•  How was the contextual factors-CSD relation studied in the literature?

• What are the future research recommendations based on this review?

The following is how the paper would be structured: The paper's methodology and methods would be discussed in the second section, followed by a review of existing CSD literature, results analysis, and finally discussion and conclusion.

2.Methodology and methods

The major goal of this study is to critically analyse pertinent CSD functioning literature by delving into the various features of the notion in diverse circumstances. The literature review's scope is limited to the evolution of CSD performance measurement over time, as well as the nature and impact of various contextual elements on CSD performance. A qualitative literature review (narrative) is undertaken with the goal of synthesising, analysing, and explaining multiple streams of relevant literature linked to the topic selected, based on the research purpose, scope, and questions. Unlike systematic literature reviews, which typically employ statistical techniques to determine the magnitude of a relationship between two variables, qualitative literature reviews focus on clarifying and explaining complex and contentious research areas that necessitate further synthesis for a better understanding of previous research's strengths and limitations. It was difficult to establish a specific set of processes to follow when completing the review of relevant literature on CSD functionality. As a result, the review approach followed the guidelines for performing a narrative literature review published by Webster and Watson (2002), Petter et al. (2008), and Wong et al. (2013). The review proceeded in the following manner, based on the insights supplied by the stated authors:

• 1. Create a list of multiple keywords to use when searching the literature (CSD functionality, complexity, sophistication, cost system performance, effectiveness.. .etc.)
• 2. Search a variety of internet databases for literature on the chosen topic (Egyptian Knowledge Bank (EKB), Google Scholar, and other online resources).
• 3. Categorize and select relevant literature based on the set of inclusion and exclusion criteria (inclusion criteria: academic papers reporting empirical results (quantitative and qualitative) published in various accounting journals between 1987 and 2020; exclusion criteria: all other literature, including books, reports, conference proceedings, and academic papers published outside of the time range selected)
• 4. Based on the literature review, synthesise, analyse, and explain the findings.

It was critical to define the main concepts included in the literature search, such as CSD, sophistication, and performance, in order to exclude topics that were not related to the selected area, especially when the studied topic was sometimes referred to as Management Accounting System in the literature. Academic articles were initially chosen based on keywords found in various online databases and reading abstracts to ensure that the paper met the criteria. The time of selection begins with the first publication of the Relevance Lost concept in 1987 and ends in 2020 to investigate the impact of the COVID-19 pandemic. More publications were discovered as a result of citations in previously selected papers or by others.A total of 45 empirical publications relevant to the chosen themes were initially chosen. Only studies providing empirical results relating to CSD sophistication and contextual factors were included in this collection. Furthermore, duplicate papers and those published in non-scientific journals were removed. Any work that was not expressly relevant to the issue of CSD and its contextual influence was ruled out. A total of 25 research papers were included in the review.

Following a review of the selected papers, three distinct streams of literature describing cost system functionality emerged: the first stream included articles depicting the implementation and success factors of emerging cost systems (especially ABC), the second stream included articles related to the structural design choices of various cost systems, and the third stream focused on cost system information quality attributes. In the literature review stage, these three streams would be grouped and analysed, along with the researched contextual variables in each group.

3.Literature review

3.1Implementation and success factors related studies

ABC was widely promoted in academia and industry as a breakthrough cost system that would improve cost information accuracy by better allocating overhead costs and providing a process picture of a company's operations. During the next decade after its launch, it drew the attention of a variety of users hoping to reap the predicted benefits, but in reality, it suffered from lower adoption rates and its usage began to stagnate, with reports of failure to implement in many contexts.

Based on a UK survey of the top enterprises, Innes et al. (2000) analysed ABC adoption rates between 1994 and 1999 and concluded that both interest in and use of ABC had showed no increase during the research period, indicating a loss of popularity and relevance. ABC was used for a variety of purposes, including budgeting, cost modelling, cost reduction and management, activity performance measurement and improvement, customer profitability, new product or service design, and stock valuation, according to the study, with varying importance rankings in both surveys. For example, when compared to 1994 results, pricing as a motive of ABC application became more important in 1999. They also looked at the impact of various explanatory variables (mostly behavioural factors) on ABC success, such as top management support, consultants involved in the implementation, user involvement in the implementation, experience with ABC (as measured by how long it's been in use), and the respondent's corporate sector. In all surveys, top management support was identified as a critical success element for ABC implementation. Despite such stagnation, some companies have been devoted to ABC adoption for more than a decade, while others are hesitant to even try out its benefits, according to the findings of this study.

The findings of the comparative study conducted by Innes et al. (2000) corroborated prior studies describing the factors that facilitate ABC implementation. Shields (1995), for example, did an exploratory study on 143 organisations that had adopted ABC, offering empirical information on the degree of success with ABC, their implementation tactics, and how different contextual variables influenced ABC success. The survey findings revealed that while four technical implementation variables (canned software, custom software, external consultants, and stand-alone vs. integrated system) are not significantly associated with ABC success, several behavioural and organisational variables, including top management support, link to competitive strategies, link to performance evaluation and compensation, training, and so on, are important in explaining variation in ABC success. Employees play an important role in the acceptance and implementation of emerging systems, according to this study. Technical characteristics (e.g. process design, activity selection, or cost drivers) are not the dominant success factors as previously advocated; employees play an important role in the acceptance and implementation of emerging systems (Krumwiede, 1998). Further research on the design, implementation, and use of various cost management systems in diverse situations is needed, according to the study.

Anderson (1995) conducted a longitudinal case study in General Motors from 1986 to 1993 in order to build a framework for ABC implementation that focused on factors that determine ABC implementation success. This study used a more qualitative approach to inquiry, using a case study to dig deeper into the success elements that may influence ABC implementation. The study's findings revealed that several organisational and behavioural factors influenced the four stages of implementation (initiation, adoption, adaptation, and acceptance), as defined in the study. Top management support and ABC system training were organisational factors influencing ABC deployment, while other contextual variables included competition, relevance to managers' decisions, and compatibility with current systems. Further research revealed the significance of examining actual implementation models in various contexts showing the actual use of ABC knowledge in real-life decision-making situations. Furthermore, examining the socio-technical interactions of cost system change allows for further investigation.

Anderson and Young (1999) used interview and survey data from 21 field study locations of two vehicle manufacturers in the United States to investigate the relationship between evaluations of (ABC) systems, contextual factors, and elements relevant to the ABC implementation process. Individual and organisational contextual elements that influence ABC implementation process factors were divided into two categories (management support and involvement, union support and available resources). The applicability of the ABC system for cost reduction and process improvement, as well as the enhanced accuracy of cost information compared to the traditional cost system, were used to determine its success.Rather than focusing on success criteria and stages of the implementation process, this study introduced the concept of cost system performance evaluation (similar to Foster and Swenson (1997)). They discovered that the contextual environment has a direct impact on both the implementation process and the outcomes of the ABC system. During the creation and implementation of the ABC system, the study recommended that diverse teams' opinions be included. Furthermore, more experimental research design is suggested to investigate the impact of various contextual elements on the evaluation of the ABC system.

The amount of Activity Based Innovations (ABI) implementation in UK manufacturing business units was explored by Al-Sayed and Dugdale (2016). They defined ABI as "any management accounting approach that uses the notion of "activities" as its hard core," broadening the scope of ABC success factors to include other methods that use the idea of "activities." According to the findings, certain elements may make a business unit more likely to adopt ABI; these factors are referred to as ABI adoption drivers. The perceived relative advantage of the accepted technique, the level of overhead, and top management backing were among these determinants. The study emphasised the importance of redefining other management accounting advances in order to facilitate future diffusion studies by capturing their main nature, essence, and application.

Researchers became more interested in ABC success characteristics in developing nations as a result of varying adoption rates in different contexts. They wanted to learn more about the cultural impact on system acceptance and use. During the ABC implementation era, Liu and Pan (2007) conducted an innovative action research in a Chinese manufacturing company (2001-2003). What sets this study apart from others is that it was conducted in a developing country with a diverse cultural environment, and it included a classification of ABC success factors based on evidence from previous ABC literature. The ABC success variables were divided into four categories in the study, as shown in Table 1. This classification is mostly based on the contextual elements that Anderson (1995) identified as antecedents to the adoption and use of cost management approaches. Despite minor differences between the two classifications, they both address the majority of contextual issues that any company may experience. According to Liu and Pan (2007), the major success element for ABC adoption is persistent top management support. Furthermore, during the early stages of ABC adoption, the engagement of an external advisory team was important. Finally, the ABC team's participative spirit contributed in the spread of ABC concepts throughout the organisation. The study recommended that more research be done on other contextual issues such as the continued use of traditional financial accounting information in gauging financial performance and cultural factors that could affect the ABC system's overall reliability.

During 2008, Nassar et al. (2009) conducted a questionnaire survey of 88 Jordanian industrial companies listed on the Amman stock exchange. According to the findings of the survey, ABC was applied by 55.7 percent of the studied industrial enterprises as a result of higher overhead costs and a wider range of products. Furthermore, according to the study, proper training for developing and operating systems, as well as advanced information technology, are essential assisting elements for ABC implementation. Technical challenges to ABC adoption included high expenses of ABC implementation and consultation, as well as issues acquiring data on cost drivers and selecting the most appropriate cost driver. These findings contradict previous research that suggested that behavioural and organisational factors were more important than technological aspects in determining the effectiveness of ABC implementation. Anderson and Shields (1995); Anderson and Shields (1995); Anderson and Shields (1995); Anderson and Shields (1995) The study pointed out to the importance of further research in other sectors of the economy and the relation between ABC costing and financial performance.

Joshi (2001) looked into the extent to which Indian manufacturing companies have implemented some conventional and recently created management accounting methods, the benefits they've reaped, and their plans to put more emphasis on these practises in the future. A questionnaire was used to survey a group of 60 large and medium-sized industrial enterprises. The study found that while people are becoming more aware of the benefits of more advanced management accounting procedures (such as ABC), they are still focusing on classic management accounting techniques. This is most likely due to cultural variations between countries. According to the author, Indian management is often risk averse, conservative, and conservative, which makes organisations more hesitant to embrace more complex MAPs. Furthermore, decreased rates of exposure to such new breakthroughs and information serve as important hurdles to dissemination. Finally, the study backs up earlier research that suggests that the scale of a corporation has a significant impact on the adoption of newly developed technologies. Future research would be directed to finding ways to reduce the lag in diffusion in developing countries.

Van Triest and El shahat (2007) evaluated the use of costing information in 40 Egyptian privately held enterprises in four distinct sectors in an Egyptian context. They discovered that Egypt's utilisation and sophistication of costing data is low. According to the report, the ABC idea is completely unknown in Egypt, and cost data is primarily used for external objectives (pricing) rather than internal improvements. As a result, rather than advocating the adoption of more advanced MAPs, it is critical to obtain a better understanding of the actual needs of Egyptian businesses. More recently, Mohamed (2013) explored if changes in the Egyptian business climate affect the degree of Management Accounting Practices (MAPs) and whether MAPs affect a company's ability to obtain competitive advantages. El Araby Company, a renowned manufacturer and marketer of electrical goods and appliances, was used as a case study for the research. The case revealed that both classic and modern MAPs were used. The company, in particular, uses the ABC system to give accurate cost data for pricing and control. The awareness that some of the product prices were not realistic, which is a crucial instrument for battling severe competition, is one of the main implementation catalysts, as indicated by the firm managers. Furthermore, the company's modern production technology necessitates accurate and fast data for quick decision-making. The need of management support for the deployment of more complex costing systems is emphasised in this case's conclusions (Abbas & Wagdi, 2014). As one manager commented, "Activity-based costing changes our concept of cost management in our firm," this validates prior results that advanced costing system acceptance is based on manager satisfaction and utilisation of produced cost information.

Finally, Hussein (2018) looked into the adoption, significance, and challenges of modern management accounting techniques. The study polled a group of senior accountants or heads of accounting departments who are familiar with, have expertise with, and are responsible for their firms' management accounting processes. A wide range of organisations of all sizes and industries operating in Egypt were included in the sample. Despite managers' awareness of the need for greater cost information supplied by more advanced costing systems such as ABC and target costing, the study concluded that they are not embraced as traditional costing procedures. This finding was supported by the following (in order of importance) surveyed impediments that could stymie the introduction of more complex MAPs:

• 1. The time taken to change societal values and practices

• 2. The high degree of uncertainty avoidance

• 3. The high cost to implement these advanced practices

• 4. Lack of financial resources

• 3.2Structural design choices

ABC, according to Labro (2006), cannot be compared to other costing systems since it includes non-volume based drivers, but standard costing methods do not. This conclusion emphasised the importance of the cost-benefit trade-off that must be made when designing and evaluating a costing system, specifically stating that "... not to strive for accuracy for the sake of accuracy, but to carefully consider context specific issues in determining the level of accuracy required." The level of accuracy is usually determined by the type of decision and other sources used to get the necessary data. Pricing decisions, for example, necessitate a higher level of precision than other judgments. Managers can also deduce without burdening the cost system with additional requirements when relevant cost information is available from other sources (formal or informal). Due to such difficulty in comparison, studies have shifted to more general features of sophistication of cost systems. In other words, studies started to classify cost systems by characteristics rather that discrete choices (Wihinen, 2012; Cinquini et al., 2013).

Abernethy et al. (2001) conducted case studies in both the health care and the fabric and textile industries to investigate the consequences of product variety for costing system design options. It was one of the first studies to look at cost system structural design options, and it judged cost system sophistication by looking at the number and nature of cost pools, as well as the number and types of cost drivers. They depicted the cost system's complexity as a continuum, with one end representing a typical costing system (i.e., one cost pool and a volume cost driver) and the other representing a sophisticated costing system (i.e. number of cost pools, hierarchical cost pools and a variety of hierarchical cost drivers).Product diversity, production process complexity, and manufacturing cost structure are three contextual aspects that may influence cost system sophistication. The outcomes of the study showed that the relationship between product diversity and cost system complexity is more complex than previously considered, depending on the setting of the study. As a result, the study recommended that future studies include a broader range of contextual elements, as well as a review of the specific costs and advantages associated with the various CSD options.

Drury and Tayles (2005) investigated the extent to which specific contextual elements influence the level of complexity of product costing system design options in UK enterprises from a similar perspective. This study, like Abernethy et al. (2001), saw costing system design choices as differing along a continuum based on their amount of complexity, which is determined by three influencing factors: the number of cost pools, the number of different types of cost drivers, and the nature of the cost drivers. Cost structure, competitive climate, product diversity, degree of customization, organisation size, importance of cost information for decision-making, and corporate sector within which a company works were all investigated.The amount of indirect costs in the cost structure, the level of competition, and the usefulness of cost information for decisionmaking were shown to be insignificant variables in affecting the choice of cost systems, according to the study. These findings ran counter to prior studies that suggested overhead % is a primary factor of cost system design. Furthermore, compared to industrial organisations, commercial and financial firms have a more sophisticated cost system, which is supported by a higher amount of overheads (Brignall, 1997). Future research will focus on analysing the lower adoption rates of more sophisticated cost systems in various situations and the benefits of extra investment in more complicated cost systems through case study research.

Al-Omiri and Drury (2007) investigated the extent to which potential contextual elements influence the characteristics of product costing systems, building on prior research on cost system complexity. The study didn't just look at ABC criteria adopters vs. non-adopters as a measure of cost system sophistication; it also looked at the number of cost pools (centres) used in the first stage of a two-stage allocation process, the number of different types of second-stage cost drivers, and direct vs. absorption costing. The importance of cost information, product diversity, cost structure, intensity of the competitive environment, size, quality of information technology, extent of use of innovative management accounting techniques, extent of use of lean production techniques, and business sector were all investigated in relation to cost system sophistication. The importance of cost information, the extent of use of other innovative management accounting techniques, the intensity of the competitive environment, size, the extent of use of lean production techniques, and the type of business sector were all found to be positively associated with higher levels of cost system sophistication. However, no link was discovered between cost system sophistication and cost structure, product diversification, or quality information technology. The lack of significance of product diversity and cost structure was surprising, given these two variables are commonly thought to have a significant impact on CSD. According to the study, such results could be ascribed to the questionnaire's use of basic measurements. Furthermore, it was felt that using a case study as an inquiry technique would be more appropriate for this type of research because it would allow for more in-depth insights into CSD. Future research should use the "interaction method" to fit by including an acceptable outcome measure as the dependent variable, according to the authors (e.g. firm performance). They also suggested that top management support, resistance to change by preparers and users of accounting information, a lack of relevant employee skills, and a lack of a perceived need by senior managers or the management accounting function to develop more sophisticated systems be taken into account.

Based on a cross-sectional field research of diverse manufacturing businesses in the United Kingdom, Brierley (2008) proposed a new definition for product costing system sophistication. He offered evidence that sophistication definitions might vary depending on context, management viewpoints, and aims, based on manager perceptions. Product costing sophistication was defined by management accountants in 16 distinct ways, with the three primary definitions being overhead assignment, the inclusion of all costs in product costs, and the product costing system's understandability. These assertions can be regarded of as traits or attributes that define the design of a cost system. Managers' desired changes in less sophisticated systems are addressed by such definitions or perceptions. Previous research has focused on the sophistication of CSDs in connection to overhead allocation accuracy, but without any reference to practise. The study's findings imply that cost system sophistication is related not just to the technological features of the system, but also to the usability and appropriateness of the cost information presented. To compare and contrast sophistication definitions across different contexts and industries, the study results must be replicated in multiple nations.

Schoute (2009) used a survey of Dutch manufacturing firms to investigate the relationships between cost system complexity, purposes of use, and cost system effectiveness, in response to previous research calls for describing the characteristics or attributes of costing systems that affect their performance. The number of cost pools and cost allocation bases, as well as the nature of cost pools and cost allocation bases, were used to operationalize cost system complexity. Nine commonly utilised cost system purposes were investigated, all of which were related to cost management or product planning. Finally, the effectiveness of the cost system was assessed using two proxies: cost system intensity of usage and cost system satisfaction. Because these elements may influence not only cost system complexity and reasons of use, but also cost system intensity of usage and satisfaction, the impact of a number of environmental, organisational, and technological factors was controlled for. According to the findings, cost systems that are aligned with CSD (i.e., level of complexity) and their intended usage are more effective. Cost system complexity, in particular, would have a detrimental impact on cost system intensity of use and satisfaction at greater levels when cost systems are utilised for product planning reasons. Cost system complexity, on the other hand, would positively affect cost system intensity of use when cost systems are employed for cost management objectives at higher levels. Furthermore, the complexity of the cost system and the purpose for which it is used have a combined effect on the cost system's effectiveness. Further research is needed, according to the author, to confirm and extend previous findings in diverse circumstances.

Ismail and Mahmoud (2012) investigated the extent to which organisational and environmental factors influence the cost system design in Egyptian manufacturing enterprises in developing countries. Product diversity, competitive environment, cost structure, and the importance of cost information were the four key contextual elements studied and their impact on manufacturing performance. ABC/Non-ABC adopters, number of cost pools, and number of cost drivers were all utilised as proxies for measuring the amount of cost system sophistication. Manufacturing performance was assessed in terms of quality, timeliness, and cost associated with the production process. The study's findings corroborated prior research demonstrating that very advanced cost systems are uncommon in Egyptian manufacturing enterprises, simple and complex traditional methods are common, and just a few organisations use simple Activity-Based Costing (Van Triest & El shahat, 2007; Mohamed, 2013).The study also indicated that the sophistication of cost systems is positively associated with the importance of cost information, but product diversity, the severity of the competitive environment, and cost structure had no such relationship. The assertion that increases in manufacturing performance as a result of reducing cycle and lead times, improving product quality, and lowering costs are connected with an effective cost system selection was a key finding of this study. Future research should look at the differences in cost system sophistication between private and public Egyptian enterprises, as well as the impact of highly sophisticated cost systems on manufacturing performance using longitudinal analysis.

After the COVID-19 epidemic, Humeedat (2020) investigated the impact of various environmental elements on cost system design in industrial businesses listed on the Amman Stock Exchange. The study emphasised the need of continuing to research this area in order to uncover other contextual elements that may influence CSD. CSD was calculated using questions on the cost classification system used, the number and kind of cost pools, and cost drivers. The impact of four contextual elements on CSD were investigated: product diversity, cost information relevance, technological changes, and caused extraordinary operational losses. It was critical to emphasise the impact of COVID19 on industrial enterprises' operating processes. COVID-19, as proposed by the author, is forcing businesses to employ increasingly complex information and manufacturing technologies in order to survive in the current economic climate.Furthermore, this study introduced a new contextual factor, triggered exceptional operational losses, which were defined as "operational losses resulting from the interruption of the production process, temporarily or permanently, due to internal or external triggered exceptional events resulting from economic, political, or health circumstances," according to the study. Due to the spread of COVID-19, the production process was disrupted, resulting in numerous operational losses that had to be mitigated through a range of remedial efforts, including cost-cutting strategies. This would have a significant influence on existing CSD. The findings of this study demonstrated that technical advancements, triggered exception operational losses, and appropriate cost information all had a favourable impact on cost system design, whereas product diversity had no effect. The study's recommendations focused on determining the effectiveness of cost systems to reduce the economic implications of COVID-19's spread and its impact on other aspects of the operational process.

3.3Critical Attributes of CSD

Previous research has primarily focused on system quality as it relates to a cost system's technological ability to give improved information. Because cost systems primarily provide cost information for managers to make decisions, assessing the quality of the information supplied by a cost system is seen to be a reflection of its sophistication. Using a sample of 277 US hospitals, Pizzini (2006) investigated the relationship between cost-system functioning, manager's opinions about the relevance and usefulness of cost data, and actual financial performance. The study looked at four key characteristics or parts of CSD: level of information, cost classification based on behaviour, cost reporting frequency, and variance analysis.A "better" cost system, it was argued, would be able to offer more complete information about different cost items, classify costs based on behaviour, generate cost reports on a regular basis and upon request, and compute various forms of variations. One of the study's key findings is that increased cost system functionality may actually hamper business performance. Cost information overload, greater expenses of extensive cost systems, and the generation of useless cost information are all examples of this. Managers believe that cost systems with greater qualities would deliver more relevant and valuable information in similar situations, according to the study's findings. Surprisingly, only the detail characteristic was substantially connected with financial performance, signalling that managers were not properly utilising cost information or that hospitals had not modified their cost systems to cope with the growing information needs. More research on cost system functionality in various scenarios is needed, according to the study.

Pavlatos and Paggios (2009) investigated the relationship between cost system functioning and contingency factors in the hospitality industry by conducting a survey of 100 prominent hotel firms in Greece in response to calls for analysing CSD in various settings. CSD functioning was evaluated using five important attributes that were comparable to those used by Pizzini (2006), with the addition of "cost data correctness" as the fifth attribute. The impact of six contextual elements on the functionality of CSD was investigated, including the extent of cost data use, low-cost strategy, size, level of competition, number of service variants, and multinational chain participation.According to the results of the study, the level of system functionality employed in the hospitality business is poor. Furthermore, the bulk of hotel cost systems do not provide accurate cost data. Hotels have not yet altered their cost methods to withstand the impact of changing environmental conditions, according to Pizzini (2006). The level of use of cost data and the low-cost strategy were shown to be positively associated with cost system functionality, but the remaining contingent variables had no meaningful relationship. Incorporating additional key situational variables that might influence CSD and studying the relationship between cost system functioning and performance needs more research.

Foong and Teruki (2009) explored the relationship between cost-system functioning and the performance of Malaysian oil-palm firms in a distinct scenario. The level of cost data, the relevancy of the cost information provided, and the timeliness of the cost system were all used to assess its functionality. The manager's perception of cost information's utility was used to evaluate the cost system's performance. Despite the fact that there is a link between cost system functionality and performance, they discovered that performance is improved by providing more relevant and timely information rather than thorough information, as evidenced by Pizzini's findings (2006). Different settings and business nature would most likely lead to different outcomes. In addition to the study's findings, the authors discovered that, when considering oil industry conditions and market pricing, managers' perceptions of the utility of cost information only partially moderate the relationship between cost system structure and non-financial performance. The study's goal was to look into the effectiveness of cost systems in various decision-making situations.

Using a sample of 119 manufacturing companies in Greece, Cohen and Kaimenaki (2011) investigated the relationships between cost accounting system structural characteristics and cost information quality qualities. The four important features established by Pizzini were used to assess the cost system structure (2006). To determine the success of CSD, eight factors of cost information quality were examined: relevance, correctness, reliability, timeliness, usability, up-to-dateness, compatibility with decision makers' needs, and thoroughness acceptable for decision-making objectives.It was discovered that the cost accounting structure has an impact on the relevance, accuracy, timeliness, usability, compatibility, up-to-dateness, reliability, and thoroughness of information for decision-making purposes in terms of detailed information existence, variance calculation, and frequency in report preparation. The ability of the systems to disaggregate costs based on behaviour and generate personalised reports, on the other hand, was not found to be statistically significant in relation to information quality. Managers understand the value of having advanced cost information during the decision-making process, according to one of their primary results. To put it another way, cost system design explains the quality of cost information provided and so reflects the perspective of cost information usability. More research on the implications of cost system design decisions on quantifiable metrics of business performance is also needed, according to the study, to better interpret managers' perspectives.

Finally, in Turkey, Uyar and Kuzy (2016) looked into the role of management accounting procedures (MAPs) in mediating the relationship between CSD and financial performance. To measure CSD, the researchers used Pavlatos and Paggios (2009)'s five key criteria. According to the data, cost system design has little bearing on business performance. Their findings (which are similar to Pavlatos and Paggios (2009)) also suggested that high costs for the establishment of a more sophisticated cost system might be justified if the firm will use the cost data obtained through various decisionmaking tools; otherwise, there is no point in bearing the cost of such a system. Practitioners who analyse CSD from a more pragmatic standpoint would benefit from such findings.

References References

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