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This paper analyzes the management accounting applications, which try to improve
the Activity-Based Costing (ABC) method. First, the paper describes them using the Strategic Management Accounting (SMA) stream. Then it presents the main features of these applications. Second, the paper examines in detail two of these features: the widening of the analysis perimeter and the relevant level of details to analyze the costs. Subsequently, it analyzes several proposals, such as Customer-Driven ABC, Interorganizational Cost Management (IOCM), Resource Consumption Accounting (RCA) and Time-Driven ABC (TDABC). Finally, it describes an experience observed in the IT supply European division of an international group. This group experiments, what we call an ‘Activity-Based Supply Chain Costing Tool’ to manage its interorganizational relations.
The Activity-Based Costing (ABC) method is the most
well-known management accounting innovation in last
20 years. Since the early stages of this method, the Anglo-Saxon
scholars have tried to develop specific applications and extensions. In France, the ABC method
and its main managerial development, Activity-Based Management
(ABM), are quite famous. But the numerous developments based on the ABC method are
neither very well-known nor discussed.
The ABC method was designed in the US during the 1980s (Cooper and Kaplan,
1988). It is a refined cost system which enables classifying more costs as direct, to expend
the number of indirect cost pools and to identify cost drivers. ABC favors better cost
allocation using smaller cost pools called activities. Using cost drivers, the costs of these
activities are the basis for assigning costs to other cost objects such as products or services.
Since, the work of Johnson and Kaplan (1987) on
Management Accounting, the
Anglo-Saxon scholars have been very dynamic. The majority of management
accounting developments are based on the Strategic
Management Accounting (SMA) stream. With
the historical research of Johnson and Kaplan, we understand the context from which
ABC arose. Looking for management accounting methods which could clarify the
decision-making process, Johnson and Kaplan
suggest, first, to analyze more deeply the
organization's activities and processes, and second, to link the strategic and the operational
management together. These proposals announce the development of the Balanced Scorecard (Kaplan and
Norton, 1996) and of a strategically-oriented ABC.
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