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Change in the relevance of cost information and costing systems: evidence from two Italian surveys

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Abstract

This paper aims to contribute to the stream of the “costing system change” research agenda by studying the role played by contextual factors, adopting a demand-side approach (Ax and Bjørnenak in Issues in management accounting. Prentice Hall, New Jersey, 2007), and by highlighting the movements of change in the adoption and use of Activity-Based Costing (ABC) and Target Costing (TC) (Burns and Vaivio in Manag Account Res 12(4):389–402, 2001; Schoute in Br Account Rev 43:120–134, 2011). Thus, the possibility of costing change with ramifications beyond those typically studied in the literature concerning the functional view of cost accounting is discussed and demonstrated (Sturdy in Manag Learn 35(2):155–179, 2004; Tsoukas and Chia in Organ Sci 13(5):567–582, 2002). This paper compares the results of two surveys over a decade apart on two samples of large-size manufacturing companies (132 and 86 companies, respectively) that investigated changes in cost objects, costing purposes and the adoption and use of two advanced costing techniques, ABC and TC. The findings reveal an increase in the number of cost objects considered, a wider use of cost information for managerial purposes and a slight increase in the use of ABC and TC in the sample. The discussion shows an increase of awareness of potentiality of cost information to support decision-making, and a refinement of cost allocation processes. The presence of “forward” and “backward” movements of ABC and TC changes in adoption and use, addresses the possibility that costing change has different directions than those usually considered under a rational view of cost accounting.

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Notes

  1. The non-parametric Mann–Whitney test was run on the 1996 data for the two subsamples of the 2005 respondents (84 companies) and the non-respondents (48 companies). The test revealed no significant difference between the two subsamples for all of the variables considered in this study, which indicates that the results of the 1996 and 2005 samples are comparable.

  2. This change is also significant if the earnings rates are adjusted for inflation (+21.00 % inflation rate 1996–2005).

  3. This distinction refers to Porter’s (1985) classification of strategic positioning between cost leadership and differentiation.

  4. The questions about the characteristics of cost and management accounting practices in the 2005 survey were simplified into four main classes of answers: Never, Sometimes, Systematically, Missing (no answer). To compare the two surveys, the findings of the first survey (1996) were considered by adding up the results of the two columns labeled “often” and “always”; this total amount was compared with the findings of the class “systematically” that was presented in the second survey (2005).

  5. Although activity-based costing and target costing are well known among practitioners in Italy, to reduce respondent misunderstandings we provided wide definitions of activity-based costing and target costing in the first section of the questionnaire. In particular, ABC was defined as “an alternative method to trace indirect costs”, whereas TC was defined as “an alternative method to measure costs in the design stage process starting from the target price”.

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Acknowledgments

The authors are grateful to Falconer Mitchell and Maurice Gosselin, who commented on a preliminary version of this paper.

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Authors and Affiliations

  1. Institute of Management, Scuola Superiore Sant’Anna, Pisa, Italy

    Lino Cinquini & Andrea Tenucci

  2. Department of Economics and Management, University of Trento, Trento, Italy

    Paolo Collini

  3. Department of Theories and Policies of Social Development, University of Teramo, Teramo, Italy

    Alessandro Marelli

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  1. Lino Cinquini
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  2. Paolo Collini
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  3. Alessandro Marelli
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  4. Andrea Tenucci
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Correspondence to Lino Cinquini.

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Cinquini, L., Collini, P., Marelli, A. et al. Change in the relevance of cost information and costing systems: evidence from two Italian surveys. J Manag Gov 19, 557–587 (2015). https://doi.org/10.1007/s10997-013-9275-4

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