The impact of management accounting, product structure, product mix algorithm, and planning horizon on manufacturing performance

This paper examines how three types of management accounting systems and two methods to determine product mix interact in both the short term and the long term to affect the manufacturing performance of two shops - one with a flat and the other with a deep product structure - in a highly automated industry that has a significantly high overhead content. Through a large-scale computer simulation, this study provides additional insights into the product mix decision through considering fluctuations caused by environmental uncertainty, using an integrated information system that integrates a manufacturing system and a management accounting system, considering the decision-outcome dynamic over time, the choice of cost content, and using both financial and non-financial performance measures. This study found that no single shop setting is best for all performance measures. The manager must determine which performance measures are the most important to their competitive success when making a decision about selecting or changing a management accounting system, product mix algorithm, or product structure. (C) 2002 Elsevier Science B.V. All rights reserved.