<TITLE: Capacity Cost Accounting, Variability Accounting and Activity-based Costing
ACADEMIC DOMAIN: economics and administration
DISCIPLINE: accounting
EVENT TYPE: lecture discussion
FILE ID: ULECD130
NOTES: continued in and continuation of ULEC20A, event also includes ULEC20B (not transcribed)

RECORDING DURATION: 20 min 30 sec

RECORDING DATE: 13.4.2007

NUMBER OF PARTICIPANTS: 10

NUMBER OF SPEAKERS: 7

S1: NATIVE-SPEAKER STATUS: Finnish; ACADEMIC ROLE: senior staff; GENDER: female; AGE: 51-over

S2: NATIVE-SPEAKER STATUS: Danish; ACADEMIC ROLE: senior staff; GENDER: male; AGE: 31-50

S3: NATIVE-SPEAKER STATUS: Finnish; ACADEMIC ROLE: masters student; GENDER: female; AGE: 24-30

S4: NATIVE-SPEAKER STATUS: Finnish; ACADEMIC ROLE: masters student; GENDER: male; AGE: 24-30

S5: NATIVE-SPEAKER STATUS: Estonian; ACADEMIC ROLE: masters student; GENDER: female; AGE: 31-50

S6: NATIVE-SPEAKER STATUS: Finnish; ACADEMIC ROLE: undergraduate; GENDER: female; AGE: 24-30

S7: NATIVE-SPEAKER STATUS: Finnish; ACADEMIC ROLE: masters student; GENDER: male; AGE: 24-30

SS: several simultaneous speakers>


<S1> okay we have some problems with these facilities but i think you can speak three minutes present <S2> [yeah] </S2> [yourself] and your school and so on and i will er find this er <FOREIGN> vahtimestari  </FOREIGN> to [help us] </S1>
<S2> [i will] okay [erm] </S2>
<S1> [because] it says that the battery is too low i don't know <S2> [okay] </S2> [what it] means but it is my pleasure this er morning to introduce our guest professor <NAME S2> from copenhagen business school and er it is the second time he is visiting us but the last time he didn't give any lectures but now we have this very good opportunity to listen to him er for about three hours we will have a break in between but i mhm er have understood that he will start with his own paper and then we will continue with our common <S2> [yeah] </S2> [paper] because we have written an article together and this article is in one of these volumes in in this beautiful book so we will present together but now <S2>  mhm </S2> <NAME S2> will continue with his own paper and i run to get help <S2> [yes] </S2> [from] how these er [facilities the computer] </S1>
<S2> [i hope it it will] work [so] </S2>
<S1> [okay] floor is <NAME S2> yours <S2> [okay] </S2> [and] i come back soon @@ </S1>
<S2> thank you </S2>
<LECTURE ULEC20A by S2>
<S2> that's all i had to say so are there any questions comments anything which might be unclear from my presentation </S2>
<S1> what was the la- er maybe he will have some questions about the last point what you had er could you could you have the last slide one more time <S2> [mhm] </S2> [do you] what do you mean by first and two and three level do you mean that erm CCA <S2> yeah </S2> capacity cost accounting was like er </S1>
<S2> the database <S1> [okay] </S1> [how you] organise data in a database the idea [is organising data data in a database] </S2>
<S1> [and the vari- variability] accounting level two [meaning that] </S1>
<S2> [yeah yeah] yeah , that's [poul's opinion] </S2>
<S1> [so ABC] </S1>
<S2> i i think i think you could rip this out @@ [so that they but] </S2>
<S1> [okay but ABC] is more developed <S2> [erm] </S2> [or what] do you mean by level three </S1>
<S2> no level three is that ABC are drawing on the the the danish recording system or the ideas in the danish recording system to make it much more easy to to aggregate data to an ABC system to ABC analysis because it at the moment it's there's erm as i see the literature about activity-based costing there is a very er weak link to the database or to the registration system recording system in activity-based costing </S2>
<S1> when if i can comment when i started as university teacher here it was in the beginning of the 70s <S2> mhm-hm </S2> so that time we we had these vagn madsen's books <S2> mhm-hm </S2> about variability [costing] </S1>
<S2> [this one here] </S2>
<S1> and yes and er he of course didn't write anything in finnish but we could all read swedish as we <S2> mhm </S2> do today and i was teaching this <FOREIGN>  variabiliteettilaskenta </FOREIGN> we called it and the finnish state government adopted it <S2> mhm </S2> but because the IT systems were undeveloped then so it was very too heavy to run <S2> [mhm] </S2> [in er] in er those systems IT systems that <S2> [mhm] </S2> [we er] existed then but i'm very familiar with this variability accounting like all the other <S2> [mhm] </S2> [people] in my age are <S2> mhm-hm </S2> and it was a good system we we liked it a lot here in finland and we wanted to teach it <S2> [mhm-hm] </S2> [for er] for er <FOREIGN> civilekonomer </FOREIGN> , when in the end of 1980s we got to know about this activity-based costing <S2> mhm </S2> we all said that oh that's nothing new because we have this <FOREIGN> variabiliteettilaskenta  </FOREIGN> so we didn't see these differences as well <S2> mhm-hm </S2> or erm what you presented there are differences now but there are many similarities <S2>  mhm-hm </S2> as you said and we didn't see this activity-based accounting as an innovation and i still think that this erm database-based variability accounting was more innovative than <S2> mhm </S2> activity-based costing er and today i think erm defence forces i'm doing some work with the defence forces in finland and er they needed cost accounting cost information <S2> mhm </S2> and in that context at least i think that developing a database not aggregating information not using some arbitrary er divisions of cost <S2> mhm </S2> would be good to have <S2> yeah </S2> then you could dig out <S2> [mhm yeah] </S2> [some information] you needed from that database <S2> mhm </S2> without artificial <S2>  yeah [yeah] </S2> [er allocations] and so on but erm but we didn't know anything here in finland about zakken worre <S2> no </S2> and not about er capacity <S2> no </S2> capacity cost accounting so it's <S2> [yeah] </S2> [amazing] that er denmark is so near almost our neighbour <S2> mhm-hm </S2> s- and one idea one innovation came to finland and very strongly <S2> mhm </S2> and the other one didn't <S2> yeah </S2> but erm also i think it's interesting that in denmark in a small country @@ er you have had very erm you have had at least two or you still have <S2> mhm </S2> professors who are interested in developing cost accounting <S2> [yes yes] </S2> [ideas and er] and comparing more international ideas <S2> [mhm] </S2> [with] with your own danish ideas <S2> yeah </S2> and it is something i think the business world er expects expect <S2> [mhm-hm] </S2> [from us] that we will develop some ideas not only to copy everything that comes from the US @or@ er [from the bigger world] </S1>
<S2> [yeah that's right] that's right </S2>
<S1> but what did you think about these cost accounting systems you did you know anything about variability accounting before , it was <FOREIGN>  variabiliteettilaskenta </FOREIGN> in finnish , [yeah] </S1>
<S3> [i didn't] know anything @about@ that [either] </S3>
<S1> [yeah] mhm-hm what about you </S1>
<S4> no never heard about it </S4>
<S1> mhm [if] </S1>
<S2> [but] wha- what what kind of literature do you use when you recommend companies to implement their recording systems because they they they might base their their er implementation onto some kind of theory or some kind of method so er don't you have anything which you tell them is they sh- they should do here , that's that's what we're trying to do here during this consult <S1> mhm </S1> consulting </S2>
<S1> yeah it's a good question that erm you mean that er or your question is that erm , what , if we consult some companies <S2> yeah </S2> what models accounting <S2> [yeah] </S2> [cost] accounting models we pick up [or] </S1>
<S2> [how] how how do they get their recording system organised [so whi-] </S2>
<S1> [yeah i don't] do that kind of consulting but <S2> [no] </S2> [my] my answer would be i assume that all is based on SAP and other ERP <S2> [mhm] </S2> [systems] and what they have to provide some tailoring <S2> [yeah] </S2> [is] maybe made but i'm afraid that there are no ideas </S1>
<S2> [yeah then they will yeah] </S2>
<S1> [ideas behind] they just collect data and er allocate data somehow but they don't have these kind of cost accounting ideas er </S1>
<S2> yeah evidence show that ERP systems are good at transaction processing but not good at er recording <S1> mhm </S1> so that might that might be the reason , and we're t- and we are trying in denmark to dig into that that er at the moment with a company who is producing and selling cigarettes house of prince <S1> mhm </S1> so because they have an ERP system and we are trying to to see how they have organised the database for decision-making and er attention-directing and so on . but maybe tha- that topic is outdated is it outdated </S2>
<S1> topic is </S1>
<S2> is the topic outdated so to speak </S2>
<S1> ah okay yeah [you you mean these SAP and the and the] </S1>
<S2> [to do the yeah so to re- to research] that kind of of things recording systems , should we focus on other things instead </S2>
<S1> i i don't think it is er it is erm in vain @it is@ it is very important to bring out some ideas that <S2> [mhm] </S2> [exist] because otherwise they think that it is only one truth <S2> mhm-hm </S2> and there is no one truth in this er cost accounting recording <S2> mhm </S2> ERP ERP ABC is not that one truth </S1>
<S2> i don't think so either </S2>
<S1> yeah or traditional [cost accounting] </S1>
<S2> [the problem with] with kaplan is that he is an engineer in fact <S1> @mhm@ </S1> so i don't think he has a traditional accounting education <S1> mhm </S1> if you take his his book cost and effect it is clearly to me that he don't know much about recording techniques and <S1> [mhm] </S1> [so on] chart of account he doesn't know anything </S2>
<S1> <FOREIGN> joo </FOREIGN> he de- developed his ideas more or less what <S2> [yeah] </S2> [was] used in practice <S2> [mhm] </S2> [what] was done in practice <S2> yeah </S2> but some other comments . i think we could ask [<NAME>] </S1>
<S2> [could you read] the article was it was it readable </S2>
<SS> @@ </SS>
<S5> maybe (it wasn't all @clear@) </S5>
<S2> or was it was it a little bit odd to read @mhm@ </S2>
<S1> you they have all have had a c- a copy of er and <S2> [mhm-hm] </S2> [they] you had the opportunity to read the article was it easy to understand the article and </S1>
<S4> what article [(xx)] </S4>
<S1> [this article] this this er <S4> [yeah] </S4> [that] he presented , or it is not this one @@ but you have an article did you have this article you got it last time </S1>
<S2> mhm </S2>
<S4> [yeah] </S4>
<S5> [i think] we got it </S5>
<S6> i didn't </S6>
<S4> well i have this article </S4>
<S1> only that one </S1>
<S4> yeah but [i think i have] </S4>
<S1> [the other one] do you have two </S1>
<S7> i have two yes </S7>
<S1> i don't know what was the problem that </S1>
<S7> you gave it at the end of the last lesson [yeah] </S7>
<S1> [okay] some students had left </S1>
<S7> yeah </S7>
<S2> mhm </S2>
<S1> [okay] </S1>
<S7> [you went] to copy the other one </S7>
<SS> <DIALOGUE IN FINNISH> </SS>
<S2> yeah it's okay @@ okay , any more questions </S2>
<S1> if not then [we will have a break] </S1>
<S2> [then then it's time for break] </S2>
<S1> er 15 minutes break and we come back and we present together the other article i i hope you have this one everybody has , you don't , i can run <COUGH> i can run to my office and print some , some i i can take this </S1>
<S3 AND S1 DIALOGUE IN FINNISH>
<S1> okay we have a 15 minutes break and we come back i will try to find some copies </S1>
<COFFEE BREAK>
<LECTURE ULEC20B by S1, NOT TRANSCRIBED>
<S1> so very shortly this er paper was presented and erm , maybe i took er spoke too much but </S1>
<S2> [no i i think you] </S2>
<S1> [i understand if] you already did one hour and more so </S1>
<S2> yeah but if i could add i i think the the from my point of view the one of the major values of that paper is to see what kind of background we have fro- from for our our understanding on on what management accounting is or was at the at different times i i think it's very i i think it's a very important understanding when we try to to analyse what is going on also in practice too <S1> mhm </S1> if you're going to analyse companies and how they use information for analysing and decision-making i think thi- this tradition might give a good explanation on why they are where they are so to speak so [(xx)] </S2>
<S1> [yeah] yeah history gives you your roo- roots or <S2> mhm </S2> yeah without the knowing the history you don't have any roots it's the same like you would want to know your own history you should know accounting history where all this came and how they came to this (xx) would you like to , you have a chance to make some questions now questions or comments , yes </S1>
<S4> actually i just was wondering how did you select those articles here how do you decide what ideas are more important than others </S4>
<S1> <FOREIGN> joo </FOREIGN> good question but <S4> [yeah] </S4> [er] <FOREIGN> joo </FOREIGN> i have an answer but what would you say </S1>
<S2> i i think i- it was very easy before the second world war it was very easy there was er were a few very important persons dominating what was going on on the different the four or five different business schools in the in the in the nordic coun- countries so it was very easy and they had very few publications so so er as you s- saw the er the variability accounting from the 1950s and and 60s so so it was very easy later on from the 1980s it's it's very difficult because you can paint one picture and you can paint a quite different picture depending on what kind of articles you are using so if we're going to to erm point at one of the weaknesses of our paper that might be our interpretation of what was going on since the 1980s (xx) i- it is a very at the moment very brief description on what is happening <S1> yeah </S1> within research of management accounting </S2>
<S1> yeah and we of course we have more focus on these earlier times and erm my answer to your question is that er of course i have quite er long experience personally so somehow i have a very strong feeling what topics to take erm and choose and er then er i told maybe first to <NAME S2> because i started a little bit before he came later to this project a little bit later of course i didn't have many bases at that time but i had an idea what topics to to select and he totally agreed so we saw it in the same way so thinking the re- reliability of the erm we were two not only one subject- subjective [understanding] </S1>
<S2> [another point is] that we were advised from sten jönsson from gothenburg university </S2>
<S1> yeah who is [even older than i @@ yeah] </S1>
<S2> [to pick pick out that that kind of] topic and also by coordinating [(xx) service and so on] </S2>
<S1> [yeah yeah] and many other [people er commented] </S1>
<S2> [so so so basically] agreeing what we did <S1> yeah yeah </S1> [to some extent @mhm@] </S2>
<S1> [nobody thought that we should] add something or we should delete something but you maybe are looking at these er last not 55 you would be hardly <S2> [mhm] </S2> [@hardly 55@] but er these last decades did you miss something what you would have added </S1>
<S4> no actually i didn't miss miss anything but i- i was wondering because in our textbook there are er some kind of techniques how how you can decide how important an article is </S4>
<S1> <FOREIGN> joo </FOREIGN> that was a good point if you compare the the normal textbook this thick er so there are many many topics we haven't touched upon you mean that </S1>
<S4> well @@ <S1> @@ </S1> i didn't mean that erm you know that our textbook what's the name of it </S4>
<S1> you mean this textbook or do [you mean] </S1>
<S4> [no] in our course book </S4>
<S1> <FOREIGN> joo joo </FOREIGN> <NAME> <NAME> <S4> [yeah] </S4> [<NAME>] <NAME> yeah </S1>
<S4> there are two chapters and in those chapters you can find some ideas how you can measure the importance of [a particular article] </S4>
<S1> [ah] </S1>
<S2> [yeah] yeah okay </S2>
<S1> okay okay [yeah we didn't use that] </S1>
<S4> [that's why i'm asking] </S4>
<S1> we should yeah making make another version of this article and using it good point you get the next class you've already read the book and <SS> [@@] </SS> [@@] could more or less criticise our <S4> [yeah] </S4> [paper] yeah @okay@ some other questions or comments . there was two er did you check them maybe @i myself too@ </S1>
<S2> yeah er it's (xx) it's one o'clock </S2>
<S1> yes it's maybe [time to] </S1>
<S2> [so you have] you need a break </S2>
<S1> mhm , okay <FOREIGN> (xx) </FOREIGN> first of all we would like to thank you <NAME S2> i say some words in finnish </S1>
<S2> yeah that's [okay] </S2>
<S1> [but] thank you very much for coming and presenting your paper and erm and er we have erm now much more than earlier understanding about cost accounting and different models maybe they belong to the history <S2> mhm </S2> today but er they have played an important phase and role in the developing maybe not in the US but here in scandinavia at least and [they ha-] </S1>
<S2> [and the] ideas are still important if you are talking about designing a system for decision-making [for] </S2>
<S1> [yeah] yeah yeah we should [learn from them] </S1>
<S2> [for for] different purposes <S1> yeah </S1> different cost different purposes that's the basic idea in these two frameworks i presented </S2>
<S1> okay <NAME S2> thanks [thanks for coming here] </S1>
<S2> [thank you for inviting] </S2>
<S1> and we give you an applaud <APPLAUSE> a little bit afterwards but <SS> @@ </SS> okay </S1>
