The costs of activity-based management

By Peter Armstrong. 2002

201 citations recorded by the source corpus.

Abstract Activity-based costing and management are now the stock-in-trade of a lucrative industry, with at least one Big Six consultancy operation devoted wholly to their promotion. Both techniques represent a major extension of accountability in the modern corporation, into a zone previously defined in accounting terms as fixed overhead. The mechanics depend on treating the staff department as a mass-producer of repeated acts of routine service (‘activities’) performed ‘for’ particular cost-objects, usually products. By treating these activities as performance indicators, payroll budgets can be linked to activity volumes thus creating pressures for the casualisation of staff employment. The activity frame of reference, particularly when linked with ‘value analysis’, also encourages the stripping-out of all staff work which cannot be accommodated within its definition of activities. This threatens a dumbing-down of staff departments in which non-routine initiatives aimed at competitive advantage in fields such as human resource management or marketing may be stifled because they cannot be accommodated within the language of accountability imposed by ABM. These arguments are concretised through an examination of the ABM treatment of one of its favoured targets: the purchasing function. The contrast between this and the supply chain management approach advocated by practitioners and academics who take the function seriously is a stark illustration of the limitations of ABM as an approach to the management of staff activity.

Subfields: Management Information Systems, Marketing, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/7550411620e3e0f79b6dc3b31fb7611ecd7f7869

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Citations in the corpus

Theoretical perspectives on intellectual capital: A backward look and a proposal for going forward (2011, background): “…issue of Critical Perspectives n Accounting contained contributions that extend this literature (see Gowthorpe, 2009; Roslender & Stevenson, 2009), few renchant critiques of intellectual capital have emerged to complement those of Munro (1995) on TQM or Armstrong (2002) n activity based management.”
Extending Institutional Analysis through Theoretical Triangulation: Regulation and Activity-Based Costing in Portuguese Telecommunications (2007, background): “ABC may merely refine conventional overhead costing (Noreen, 1991; Bromwich and Bhimani, 1994; Innes and Mitchell, 1998; Armstrong, 2002) and arbitrary (but possibly reasonable) cost allocations remain, making ABC’s technical merits difficult to evaluate (Innes and Mitchell, 1996; Innes and Norris,…”
Interrogating accountability: An illustration of the use of Leximancer software for qualitative data analysis (2010, unknown): “), with issues being related to “quality” and “costs” ( Armstrong, 2002”
Accounting and control of the labour process (2006, background): “Clearly, indirect expenditures - expenditures on production overheads - do not embody use-values in cost objects, and therefore “allocations of them can never be real” in this sense (Armstrong, 2002, p.104).”
Performance measurement and costing system in new enterprise (2005, background): “The result is that some indirect costs are excluded from the cost-pools associated with a practical set of cost drivers (Armstrong, 2002).”