Accounting Information for Management Decision-Making--A Case Study in the Household Goods Moving and Storage Industry
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Louisiana State University LSU Digital Commons LSU Historical Dissertations and Theses Graduate School 1964 Accounting Information for Management Decision-Making--A Case Study in the Household Goods Moving and Storage Industry. Irwin Melvin Jarett Louisiana State University and Agricultural & Mechanical College Follow this and additional works at: https://digitalcommons.lsu.edu/gradschool_disstheses Recommended Citation Jarett, Irwin Melvin, "Accounting Information for Management Decision-Making--A Case Study in the Household Goods Moving and Storage Industry." (1964). LSU Historical Dissertations and Theses. 915. https://digitalcommons.lsu.edu/gradschool_disstheses/915 This Dissertation is brought to you for free and open access by the Graduate School at LSU Digital Commons. It has been accepted for inclusion in LSU Historical Dissertations and Theses by an authorized administrator of LSU Digital Commons. For more information, please contact [email protected]. This dissertation has been 64—8805 microfilmed exactly as received JARETT, Irwin Melvin, 1930- ACCOUNTING INFORMATION FOR MANAGEMENT DECISION MAKING— A CASE STUDY IN THE HOUSEHOLD GOODS MOVING AND STORAGE INDUSTRY. Louisiana State University, Ph.D., 1964 Economics, commerce-business University Microfilms, Inc., Ann Arbor, Michigan ACCOUNTING INFORMATION FOR MANAGEMENT DECISION MAKING A CASE STUDY IN THE HOUSEHOLD GOODS MOVING AND STORAGE INDUSTRY A Dissertation Submitted to the Graduate Faculty of the Louisiana State University and Agricultural and Mechanical College in partial fulfillment of the requirements for the degree of Doctor of Philosophy in The Department of Accounting by i^ Irwin Mt Jarett B.B.A., Texas Technological College, 1957 M.B.A., Texas Technological College, 1959 January, 1964. ACKNOWLEDGMENT Appreciation is gratefully acknowledged to Professor Clarence L. Dunn for his dir.ection of this dissertation and to the other members of my committee, Drs. Robert S. Felton, Leon C. Megginson, Karl D. Reyer and Robert F. Smith, for their helpful criticism. Appr ciation is also acknowledged to the National Moving and Storage Technical Foundation and.their staff, to Arthur Andersen & Co., and to the individual members of the household goods moving and storage industry who so willingly provided their assistance. TABLE OF CONTENTS I. INTRODUCTION 1 Scope of study 1 The household goods moving industry in transportation 1 History 2 Post-war growth 7 The household goods moving and storage industry today 9 The position of this study in the industry- 12 II. THE HOUSEHOLD'GOODS MOVING AND STORAGE INDUSTRY-- REGULATION AND RELEVANT STATISTICS 17 Federal regulations 17 Development of the regulations 23 Definition of household goods 24- Estimating the cost of a move 25 Prompt delivery of shipments 31 State regulations 32 Other facets of the industry 33 Relationship of the small mover and the large mover 36 The importance of each move 39 The importance of transportation 4-2 Summary 4-3 III. ANALYSIS OF QUESTIONNAIRES 4-5 The mailing lists 45 The results --questionnaire number 1 LJ7 Storage 50 Trucking 53 Information 55 Questionnaire number 2 67 Conclusion regarding both questionnaires 68 IV. OBSERVATIONS, -ANALYSIS AND IMPLICATIONS OF THE FIELD WORK 69 A discussion of the unit of measurement 70 Sales effort 76 Packing effort 77 Loading and unloading efforts 78 Transportation effort 80 Summary of the unit of measurement 89 Dependent and independent revenues 89 Conclusion 92 iii V. A CONCEPT OF ACCOUNTING CONTROL 93 The creative functions 94 The active functions 95 The accounting control concept 96 The control concept and its application to the household goods moving and storage industry 100 Conclusion 109 VI. CONCLUSIONS 111 Further applications--use of information provided by accounting control concept 111 What should the industry expect from the utilization of such a concept? 112 A direction for future studies--the conclusion 112 A SELECTED BIBLIOGRAPHY 115 U. S. government publications 115 Periodicals and newspapers (non-industry) 117 Books and pamphlets 119 Special industry publications 122 APPENDIX A 125 APPENDIX B 200 APPENDIX C 224 iv LIST OF TABLES I . Percentage distribution--household goods 1957-1959 37 II. Question No. 3--breakdown between actual and estimated figures, by amount of storage space 52 Ill. Question No. 10--frequency of tachographs installed and their usage Question No. 14--statistics maintained by the companies 54 IV. Question No. 14--firms that answered question 14C in categories by PCA classifications 58 V. Question No. l6--elassification of respondents by revenue, divided between those who use some form of machine bookkeeping and those who do not 60 VI . Question No. 19--industry problems, classified by importance 61 VII . Question No. 8--relationship of tractor ownership by PCA classification 65 VIII. Question No. 8--PCA classification, by amount of revenue for the firm 66 v LIST OF FIGURES Requirements imposed on interstate I . C . C.-certificated motor carriers by state regulatory commissions Comparison of cost-per-hour to the number of days the rig is in service A pictorial representation of a management concept and the accounting control system ABSTRACT The basic problem of the household goods moving and storage industry is a lack of detailed and prompt informa tion’ reported to management about its own operations. Individual firms make decisions largely by intuition, and the whole industry lacks any clearly defined overall purpose. Library research reveals that the industry itself is aware of this problem; during the past five years a program of formal research has been inaugurated which has revealed the main problem as being the lack of any clear idea about the relationship of accounting information to the active management of the business, or even about the inter-relationships between the various departments within a firm. Such research has been devoted principally to the development of control concepts to provide the information necessary for specific management activities. Paradoxically, the industry is accustomed to gathering quantities of data. With no effective central controlling body and with little self-discipline, the industry has come under rigorous regulation by the I.C.C. and by the various vii state commissions. To meet these various legal demands, the industry has had to gather great quantities of informa tion atout its operations; such information has been used merely to fulfill these legal requirements, and has hardly been applied by management to the more effective control of business. In order to learn more about the tendencies revealed by the industry's formal research program, and to gather the information by which the"problem could be more clearly 'defined, two questionnaires were mailed to leading members of the industry, and the results were compiled. Two years of field research helped in further analyzing the problem, and suggested the lines along which concepts could be developed to provide management with proper information and the means to use it effectively. These investigations revealed that a much more detailed knowledge of operations was required--extending to the work within individual de partments, as well as for the whole firm. It became clear, nevertheless, that there could be no simple individual consideration of the departments; they are integrally dependent upon one, another; and though most of the profit seems to be made from such subsidiary activities as packing and crating, these could not take place without the basic operation of moving. The means by which this knowledge of operations can be gained is by the implementation of an accounting control concept of such complexity as to no longer rely on outmoded bookkeeping methods but to utilize instead the modern computer. Furthermore, the classification of this informa tion must conform to the management structure of the firm. Only in this way can the basic credo of modern industrial management be fulfilled: that performance should readily be measured, in detail, against the expectation of predetermined goals. With such a flow of comprehensive information the old method of management by intuition becomes unnecessary. As a result, there will be a planned program which can appeal to, and hold, the young men needed to perpetuate, expand, and improve the industry. CHAPTER I INTRODUCTION Scope of Study The purposes of this study are: first, to investigate and analyze how management decisions are made in the house hold goods moving and storage industry; and secondly, to determine the interrelationships of the various services offered hy the industry so that its accounting systems can provide the information management needs to make the dec is ions. Three major restrictions are imposed. First, this study is concerned only with the small and middle-sized firms as .opposed to the large van lines. Secondly, the approach has been to obtain material principally from empirical research, with library research being limited to the period from 194-5 to the present. Thirdly, although the industry provides many services, the emphasis of this study is placed upon the long distance hauling function which provides the major portion of the industry's revenue. The Household Goods Moving Industry in Transportation For a period of time extending roughly from 1920 to 1950 the contributions of economic theory to the field of transportation have been 2 relatively meager. By about 1920 the problems of joint, fixed, and common cost had been treated thoroughly by Pigou,