Which ABC? Accounting based on causality rather than activity-based costing

Michel Lebas

European Management Journal, 1999, vol. 17, issue 5, 501-511

Abstract: When it was first introduced ABC stood for Activity-Based Costing. It originally meant Product Full Cost calculated on the basis of an allocation of indirect costs according to `activities', i.e. what people actually do, also referred to as `processes'. In this article the author suggests that the three letters ABC be used to refer to an accounting approach aimed more at understanding causality and giving decision-makers the possibility to manage costs at the root, rather than limiting it to a method of product cost calculation. This means that ABC should rather be the acronym for Accounting Based on Causality1.

Date: 1999
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