In the period from the mid 1980s many academics and practitioners claimed that Activity Based Costing (ABC) techniques would lead to vast improvements in the accuracy, usefulness and relevance of cost information in organisations. Later work seems to suggest that these potential benefits have not been forthcoming. This assignment is about the rise and fall of ABC and the underlying issues that drove these changes.
You are required to:
Explain why ABC methods were thought to be a means by which management accounting information could be made more useful to organisations and assess whether these potential benefits have been achieved.
The following articles should be regarded as essential reading for successful completion of the in-course assignment. Credit will also be given for the appropriate use of additional literature. The readings given below are good starting points but are not sufficient for you to answer the question to a good standard.
Bjørnenak, T, & Mitchell, F 2002, ‘The development of activity-based costing journal literature, 1987-2000?, European Accounting Review, 11, 3, pp. 481-508,
Cooper, R, & Kaplan, R 1991, ‘Profit Priorities from Activity-Based Costing’, Harvard Business Review, 69, 3, pp. 130-135,
Drennan, L & Kelly, M 2002 , ‘Assessing an activity-based costing project’, Critical Perspectives on Accounting, Volume 13, Issue 3, June 2002, Pages 311-331
Malmi,T, 1997 ‘Towards explaining activity-based costing failure: accounting and control in a decentralized organization’, Management Accounting Research, Volume 8, Issue 4, December 1997,
Pages 459-480,