Product costing in Palestinian manufacturing prganizations

This paper presents and comments on the findings from a questionnaire survey on the product costing practices used by 32 manufacturing companies in Palestine, with a response rate 100 per cent. The aims of the paper are (1) to provide evidence to ascertain the extent of product costing can be judged, (2) to gather evidence about the current status of activity-based costing adoption and implementation, and (3) to compare and comment upon the theory and practice of product costing. The survey findings indicate that product costs computed to meet inventory valuation requirements are widely used for decision- making and internal profit measurement. The majority of companies, however, used both full costs and variable costs for decision-making and findings suggest that product information is used in a flexible manner. The paper reports on the methods used by companies to compute full product costs. Most organizations used questionable overhead allocations that are likely to result in the reporting of distorted product costs. The concluding sections of the paper discuss the possible reasons why observed practices differ from conventional wisdom and suggest areas where further research is required.