Abstract: This paper reports on a review of the extent to which the activity costing model (Activity Costing and Input–Output Accounting, G. J. Staubus) has been accepted in practice and in accounting education. Activity costing is a model of cost accounting in which the objects of costing are activities instead of products, e.g. the process of making a product rather than the product made. It incorporates a fundamental economic definition of cost, emphasizes the cost of using resource inputs, recognizes each significant resource rather than three cost elements, treats increments in activity as objects of costing and costs those increments, and attends to asset holding costs and the costs of using plant assets. Evidence of acceptance of those ideas varies from moderate to none. The method called ‘activity-based costing’ can be interpreted as a rejection of the conventional treatment of overhead in favor of identifying specific services (resources) being put into the processes (activities) being costed. Also, a bit of acceptance of the idea that materials holding costs should be loaded onto materials acquisition costs is found. Otherwise, activity costing has not been a great success in the ‘market place’. The unhelpful explanation for lack of acceptance of activity costing is that ‘consumers’ perceptions of the prospective costs and benefits of adopting activity costing have been weighted more heavily on the cost side. Further inquiry has identified several types of costs: direct costs of operating the cost system (or two cost systems), cognitive and educational costs, emotional costs, and dislike of the results because the model yields higher and more variable costs than conventional costing.
Publication Year: 1990
Publication Date: 1990-12-01
Language: en
Type: article
Indexed In: ['crossref']
Access and Citation
Cited By Count: 34
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