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The Legacy of Activity-Based Costing: Addressing the Need for a Hybrid Methodology for Costs Allocation

B. Tim Lowder

Saint Leo University

March 2006

This paper introduces the historical development of concepts and techniques in managerial accounting that have shifted management paradigms toward alternative methods of costs allocation. In addition, the paper evaluates past, current, and future trends in managerial accounting techniques and their influence on companies throughout the United States. The objective of this analysis is to provide activity-based cost accounting users with a better, more focused perspective on how to transition their current accounting systems into the future based upon these paradigm shifts. Activity-Based Costing (ABC) has demonstrated positive results for the companies that made it through the implementation process. As will be demonstrated, newly developed paradigms in cost accounting methodologies are adding to the complexity as to which system provides the best information for decision-making purposes. Within the context of these new cost accounting paradigm shifts, a critical issue is arising for current users of ABC. The issue addressed in this paper is the need for a hybrid methodology of costs allocation that provides better information for all strategic planning time horizons.

Number of Pages in PDF File: 22

Keywords: ABC, activity, costing, German, process, allocation, costs, cost, GPK, absorption, pools, accounting, systems, hybrid, paradigm, shifts

JEL Classification: M40, M46

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Date posted: August 3, 2006  

Suggested Citation

Lowder, B. Tim, The Legacy of Activity-Based Costing: Addressing the Need for a Hybrid Methodology for Costs Allocation (March 2006). Available at SSRN: https://ssrn.com/abstract=920957 or http://dx.doi.org/10.2139/ssrn.920957

Contact Information

B. Tim Lowder (Contact Author)
Saint Leo University ( email )
33701 State Road 52
PO Box 6665
Saint Leo, FL 33574-6665
United States
843-245-7583 (Phone)
HOME PAGE: http://www.saintleo.edu
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