A cost-plus trap: Pricing heuristics and demand identification

Cost plus pricing is a common pricing heuristic. We investigate whether a firm, following cost plus pricing in a simple environment, will eventually have enough information about demand conditions to switch to an optimization-based pricing approach. We find that with unsophisticated statistical approaches this is unlikely, and even with a Bayesian decision theoretic approach there can be what we call a cost plus trap.     

Profits,Layoffs, and Priorities

This study examines the deliberations of professional MBA students when presented with a dilemma that weighs the difference between commitments to profit- maximization against concerns for fired workers who would need to seek a new job during a recession. Using content analysis, accounting, economic, and ethically based rationales that differ from the profit-maximizing recommendation are categorized. Results also show that those who make non-profit-maximizing recommendations consider, but ultimately reject the profit-maximizing approach to layoffs.     

Certified public accountants: Ethical perception skills and attitudes on ethics education

This study investigated the proficiency of CPAs in recognizing and evaluating ethical and unethical situations. In addition, CPAs provided attitudes on ethics education. Respondents were asked to evaluate the ethical acceptability of CPA behavior as presented in six vignettes involving a variety of ethical dilemmas from questions of conflict of interest to questions of personal honor. The results tend to signify that CPAs can, to a degree, distinguish ethical and unethical behaviors. It appears that ethical behaviors and very specific unethical behaviors were more easily identified by practitioners. This may reveal uncertainty and apprehension as to exactly what constitutes unethical behavior since, in many circumstances, this resolution is made on a case-specific basis rather that via a universal rule. In addition, it is interesting to note that CPAs tend to picture themselves as more ethically-oriented than their peers.With respect to ethics education, the CPAs indicated that instruction in ethical concepts and literacy was important and should definitely be embodied in the accounting curriculum as well as at all educational levels. However, the CPAs were remarkably uncertain and ambivalent as to the qualifications of university faculty to provide this instruction and guidance.Suzanne Pinac Ward, CPA, is an Associate Professor of Accounting at the University of Southwestern Louisiana in Lafayette, LA 70504. She received her Ph.D. in Accounting. Dr. Ward is a member of the American Institute of Certified Public Accountants, the Louisiana Society of Certified Public Accountants, and the American Accounting Association.Dan R. Ward is a Professor of Accounting at the University of Southwestern Louisiana in Lafayette, LA 70504. He received his DBA in Accounting. Dr. Ward is a member of the International, Taxation, and Accounting Behavior and Organizations Sections of the American Accounting Association, the Society of Petroleum Accountants, and the Academy of Accounting Historians.Alan B. Deck, CMA, is an Assistant Professor of Accounting at the University of Southwestern Louisiana in Lafayette, LA 70504. He received his Ph.D. in Accounting. Dr. Deck is a member of the Institute of Management Accountants and the American Accounting Association.     

Approaches to the factory of the future. An empirical taxonomy

An empirical analysis of the patterns in which companies invest in advanced manufacturing technologies (AMTs) such as computer-aided design, computer-aided manufacturing, and flexible manufacturing systems is presented. Data for this analysis are gathered from 202 manufacturing plants chosen from industries generally considered to have relatively high investments in technology.Three general types of AMTs are identified from the literature: design, manufacturing, and administrative. Multiple item scales are developed to measure each type of AMT. These scales are shown to be reliable instruments, and are used to develop an empirical taxonomy which validates existing conceptual typologies of AMTs. A cluster analysis reveals four distinct groups of companies with respect to their approaches toward investing in AMTs. TRADITIONALISTS do not invest heavily in any of the three types of AMTs. GENERALISTS have moderate investments in each technology type. HIGH INVESTORS have the highest investment in each of the three technology types. The most interesting group may well be the DESIGNERS, which have low investments for manufacturing and administrative AMTs, but have the second highest investment in design-related AMTs.An analysis of the four technology groups reveals that while plants do differ in terms of plant size and integration, they do not differ significantly in terms of industry membership or performance. This suggests that successful firms can be found in each of the groups and that good strategies may be found that are consistent with each of these approaches. Therefore, the taxonomy is fairly robust, and further research must analyze companies within these groupings in order to identify the contingencies or other factors that may act in conjunction with technology to separate high and low performing firms. The data from our study clearly suggest that investments in technology alone are not a causal factor for performance improvement.     

Are medium‐scale farms driving agricultural transformation in sub‐Saharan Africa?

This study presents evidence of profound farm‐level transformation in parts of sub‐Saharan Africa, identifies major sources of dynamism in the sector, and proposes an updated typology of farms that reflects the evolving nature of African agriculture. Repeat waves of national survey data are used to examine changes in crop production and marketed output by farm size. Between the first and most recent surveys (generally covering 6 to 10 years), the share of national marketed crop output value accounted for by medium‐scale farms rose in Zambia from 23% to 42%, in Tanzania from 17% to 36%, and in Nigeria from 7% to 18%. The share of land under medium‐scale farms is not rising in densely populated countries such as Kenya, Uganda, and Rwanda, where land scarcity is impeding the pace of medium‐scale farm acquisitions. Medium‐scale farmers are a diverse group, reflecting distinct entry pathways into agriculture, encouraged by the rapid development of land rental, purchase, and long‐term lease markets. The rise of medium‐scale farms is affecting the region in diverse ways that are difficult to generalize. Findings indicate that these farms can be a dynamic driver of agricultural transformation but this does not reduce the importance of maintaining a clear commitment to supporting smallholder farms. Strengthening land tenure security of local rural people to maintain land rights and support productivity investments by smallholder households remains crucial.     

Willingness-to-Pay for Fresh Brand Name Beef

Willingness‐to‐pay (WTP) for hypothetical brand name fresh beef products was measured using the Becker‐DeGroot‐Marschak experimental auction procedure. Auctions were conducted in a field setting in and around Winnipeg, Manitoba during the summer of 2006. Four hypothetical brands were developed to individually represent local/Canadian, natural, guaranteed tender, and Angus attributes, respectively. It was found that WTP was highest, approximately $1.31 per 12 ounce steak, for branded steaks associated with the natural, guaranteed tender, and Angus attributes. It was further discovered that WTP is positively affected by preference for the brand name, frequency with which beef is consumed, and the male gender. Conversely, confidence in selecting beef tended to reduce WTP, while effects of age, education, and income were uncertain. It is concluded that the industry should explore opportunities to market higher value products both domestically and abroad if the cost of doing so does not exceed WTP premiums. Nous avons évalué, à l'aide de la procédure d'enchères expérimentales Becker‐DeGroot‐Marschak, la volonté de payer (VdP) des consommateurs pour des produits de b?uf frais de marques hypothétiques. Nous avons organisé des enchères à, et aux alentours de, Winnipeg au Manitoba, au cours de l'été 2006. Quatre marques hypothétiques ont étéélaborées pour représenter respectivement les caractéristiques suivantes: b?uf canadien ou local, b?uf naturel, b?uf à tendreté garantie et b?uf Angus. Nous avons noté une VdP plus élevée, soit d'environ 1,31 $ par bifteck de 12 onces, pour le b?uf naturel, le b?uf à tendreté garantie et le b?uf Angus. Nous avons également observé que la préférence pour la marque, la fréquence de consommation de b?uf et le sexe masculin avaient une influence favorable sur la VdP. Réciproquement, la confiance dans le choix du b?uf avait tendance à diminuer la VdP, tandis que l'influence de l'âge, de la scolarité et du revenu était incertaine. Nous avons conclu que l'industrie devrait examiner les possibilités de vendre des produits à plus grande valeur, tant au pays qu'à l'étranger, si le coût n'excède pas les bonifications que les consommateurs sont prêts à payer.