Cost accounting for rational FCIM investment analysis

Purpose Aims to review accounting practice with regard to the calculation and attribution of technology costs (i.e. depreciation) to products, to evaluate the impact of expected depreciation charges on FCIM system investment, and to propose an alternative depreciation method that is congruent with FCIM resource consumption patterns and better enables rational managerial analysis of the FCIM system investment decision. Design/methodology/approach Reviews and extends existing models to propose a new model of cost accounting for rational FCIM investment analysis. Findings The proposed model better enables rational analysis of FCIM system investment options, resulting in a more accurate prediction of income and product line profitability attributable to FCIM system investment. Originality/value The logic embodied in this paper should be employed to further the development of more refined models of technology cost attribution. Simulations of machine use and maintenance by engineers, analogous to that presented in this paper, could provide a useful estimate of FCIM system exhaustion.