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Explaining implementation difficulties associated with activity-based costing through system uses

Elodie Allain and Claude Laurin

Journal of Applied Accounting Research, 2018, vol. 19, issue 1, 181-198

Abstract: Purpose - The purpose of this paper is to explore how and why the uses (enabling or controlling) of an activity-based costing system could cause difficulties in implementing such a cost system. Design/methodology/approach - The authors conducted a case study in a French insurance company. Three successive research periods were undertaken: from March to August 2005, between October 2008 and June 2009, and in 2012. In total, 51 interviews were conducted during these periods. Other useful information was also collected through conversations, observation, and through the consultation of internal documents. Findings - The results show that designing a cost system aimed at being simultaneously used in controlling and enabling ways can generate important difficulties. Furthermore, the results show that attempting to get around these difficulties could result in investing significant amounts of resources with no guarantee of success. Research limitations/implications - Beyond the difficulties of extending the scope of application of case studies, the study was conducted in an organization involved in the insurance industry which could further limit its general applicability. Practical implications - Based on the experience at Rassura, the authors argue that managers should be aware that designing and implementing a cost system that can simultaneously be used in both controlling and enabling ways is a very difficult, if not an insurmountable challenge. Originality/value - The results highlight that one important characteristic of a cost system, how it is used, could explain, at least partially, implementation difficulties related to technical challenges, resistance to change and lack of resources.

Keywords: Implementation; Activity-based costing; Cost systems; Enabling/controlling; Uses of controls (search for similar items in EconPapers)
Date: 2018
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