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| Author: | Q'Leary, D. E. |
| Title: | The representation and impact of information system reliability on cost variance decisions. |
| Journal: | Decision Sciences
1989 : SPRING, VOL. 20:2, p. 378-392 |
| Index terms: | BUDGETARY CONTROL CONTROL SYSTEMS MANAGEMENT ACCOUNTING |
| Language: | eng |
| Abstract: | Management cannot directly observe cost variance processes from the production system. Instead it depends on a report from the appropriate information system as to whether a process is in control or out of control. Further, cost variance information systems are not perfectly reliable. The paper tries to model analytically the problem. It is shown that ad hoc heuristic rules are unlikely to yield the analytical optimum. Moreover it is demonstrated that neglecting reliability can lead to considering unimportant variances while not considering important ones. |
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