Journal of Accounting and Management Information Systems (JAMIS)

Learning by Doing and What–If Analysis

Supp/2006 ,   p433..442


Keywords:   What-if analysis, Management accounting systems, Learning by Doing, ABB & What-If model, Perform measures

The management accounting and operations management literatures argue that the adoption of an advanced technique, such as What-If, necessitates complementary changes in a firm’s management accounting and control system.
The purpose of the paper is to help managers predict the consequences of their decisions regarding individual products, customers, and suppliers. Such decisions, taken in the current period, have important implications for changes in the activity levels in the future. This study presents a What-If model in which accountants’ learning on the job and their choices of professional services jointly affect performance.
Managers use ABB (Activity-Based Budgeting) to predict resource supply and spending levels for upcoming periods, and to calculate the expected future costs of products, services, and customers. An important feature to couple with ABB is What-If model. Such what-if analyses are important extensions of the ABC (Activity-Based Costing) methodology. They enable managers to explore the resource supply implications of decisions made about products, customers, and operating processes. The existing ABC model, either retrospective or prospective, provides the starting point.
The results obtained indicate that the subsequent what-if analysis enables managers to perform, easily and inexpensively, special studies that translate a What-if resource usage model into a scenario containing the proposed changes in resource supply and spending.