Date of Award

1983

Document Type

Thesis

Degree Name

Master of Science

Department

Business

First Advisor

Patrick Land

Second Advisor

Patrick Busch

Third Advisor

Omesh Choksi

Abstract

This culminating project by Joseph M. Taylor presents a detailed case study of the installation of a standard cost system in a small manufacturing environment, specifically at Hofman Manufacturing, Inc.—a pseudonym for a real St. Louis-based hardware company. The project explores the integration of management accounting principles with a computerized management information system, aiming to improve internal planning and control processes. Prior to the system's implementation, Hofman Mfg. lacked an internal accounting department, relying instead on external public accountants. The absence of timely and accurate cost data hindered effective pricing and decision-making, particularly amid a volatile economic environment.

Through direct participation in the system's installation, the author examines both theoretical and practical dimensions of standard cost systems. Topics covered include developing cost standards for materials, labor, and overhead; building T-account models; implementing flexible budgets; and managing variances. A key aspect of the project involves loading cost data into an electronic database using a Basic Four minicomputer system with integrated software for inventory and bill of materials management.

The study highlights the challenges and strategic considerations of initiating a cost accounting system from scratch, including interdepartmental collaboration, data standardization, and system customization. It underscores how standard costing serves as a vital tool for operational efficiency and profitability analysis. By combining academic research with firsthand implementation experience, the project contributes valuable insights into the role of management accounting in small manufacturing enterprises undergoing technological transformation.

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