A Typology of Cost Accounting Practices Based on Activity-Based Costing – A Strategic Cost Management Approach

Abstract

This article examines cost accounting methods containing one or more activity-based costing (ABC) like dimensions. The objective is to analyze cost accounting proposals with, in part, a philosophy reminiscent ABC. The research purposes are to analyze the strategic dimension of the methods described and to build a typology useful for managers. The discussion leads to a four-dimensional typology based on three strategic objectives assigned to the cost accounting systems. The foundation of the research is the Strategic Cost Management Theory from which emerges the ABC philosophy. The methodology applied is an academic and professional literature review. The typology designed shows common points and similarities of the methods observed and their strategic dimensions. Some of the methods studied are more or less useful for practitioners, according to the situation of their companies. Keywords: strategic cost management, activity-based costing, typology

Process Mining Human Resources Cost Calculations In Time Driven Activity Based Costing

“…Since the 70s, when American industrialists used a cost accounting system for recording the cost of the volume of production and the cost of their products, depending on the necessary activities, they essentially created a potential method of Activity Basic Costing (ABC). However, the cost management strategy is considered by scientists to be the forerunner of Activity Based Costing, which made its appearance in the 1980s, a time when the complexity of management was leading to ever higher overhead and procedural costs, thus pushing researchers to design its foundations (Wegmann, 2019).…”

“…The above researchers, with their fundamental work on accounting management practices and strategy-based accounting developments, highlighted the importance of accounting management, while laying the foundations of ABC. At the same time, looking for the accounting management methods themselves that could interpret the decision in the process, they first proposed an in-depth analysis of the processes and activities and then a close link between operational and strategic management, which was the reason for the design of the strategically oriented ABC (Wegmann, 2019).…”

“…While since the early 1980s there has been an interest in accounting management strategy, with many scholars promoting the benefits of this method (Wegmann, 2019), in the 1990s, however, ABC was https://doi. org/10.15405/epsbs.2022.12.02.15 Corresponding Author: Glykas Michail Selection and peer-review under responsibility of the Organizing Committee of the conference eISSN: 2357-1330 recognized as a timely and reliable method of informing the factors that influence costs and guide management in rational decision-making (Ferdows et al, 1986).…”

“…In 1989 in particular, a functional model of confrontational environmental analysis and analysis of internal processes through ABC was developed by Shank and Govindarajan who proposed the integration of supplier and customer dimensions into the cost allocation system. Over the years, in many cases businesses, in order to manage their costs, have essentially experimented with ABC-based tools (Wegmann, 2019).…”

“…However, there is a lot of criticism in the last decade on the validity of resource allocation in ABC that affects the accuracy of cost estimations. One of the approaches developed to assist in more accurate cost allocation in ABC is the Resource Consumption Accounting (Wegmann, 2019). Resource Consumption Accounting has proved to be a useful approach in developing cost allocation scenarios but does not by any means provide real time monitoring of activity costs (Heshmat et al, 2015).…”