Summary and conclusions

45 analyst will become even more evident. The use of ABC/ABM also changes – instead of just being an accounting tool, ABC/ABM becomes an instrument which supports operational and strategic decisions. Thus, the nature of information used by the systems changes; apart from information about costs, the systems are fed on non-financial information, as well as information needed for performance evaluation.

perspective of what cost it was and where it was generated, but it was rather more important which process generated it and why;

d) the concept of cost drivers and activity drivers, which diffused thanks to ABC diffusion, turned out to be extremely useful in cost management because it drew attention of management accounting specialists to the significance of other drivers than those based on production volume or sales. The concept of activity hierarchy was especially important; it drew attention to the significance of activities and activity cost drivers not only on the level of a product unit, but also on the level of a batch or a type of products and company as a whole;

e) development of the ABC concept resulted in its wider range of use, outside manufacturing companies. ABC methods entered other organizations, especially service companies (e.g. financial firms and telecommunications companies), trading companies and non-profit organizations (e.g. healthcare, administration, education);

f) development of activity-based costing and management accounting based on activities fostered emergence and development of such methods as cost analysis and customer profitability analysis, distribution channel analysis or sales regions analysis. Development of activity-based costing made the focus move from cost calculation onto cost management;

g) despite the fact that emergence and development of activity-based costing concept require change of the paradigm in terms of such crucial issues as cost classification, cost behaviour analysis, activity definition, cost object definition and cost driver definition, activity-based costing should be seen as an extension of traditional full-costing system;

h) emergence and development of activity-based costing also influenced the way management accounting specialists were perceived by management and personnel.

Traditionally, management accounting specialists were perceived through the techniques and procedures they used. Numerous implementations of activity-based costing as well as publications on ABC and ABM made people come to realization that management accounting specialists, in order to implement ABC effectively, should also be interested in resources and their drivers, performed processes and activities and their drivers. The specialists became aware of the fact that cooperation with other managers in multifunctional teams is necessary for successful implementation of activity-based costing. ABC implementation is only possible when people with extensive knowledge of logistics, marketing or operational activity take part in the implementation process. The necessity of cooperation between management accounting specialists and management fosters changes in the image of specialists, and, additionally, improves their position within the organization;

i) development and diffusion of ABC and ABM required from management accounting specialists, as well as from other managers to deepen their knowledge of cost accounting and management accounting. For an effective ABC implementation in an organization, a better understanding of processes, activities, resources, drivers and objects within the company is necessary. The process of understanding

47 different aspects of company’s operation is difficult and time-consuming, yet it is a prerequisite for a successful activity-based costing implementation.

Although, activity-based costing has not diffused in the degree as expected in the late 1990s, yet majority of both practitioners and theoreticians agree that the emergence and development of this concept improved significance of management accounting and, thanks to it, management accounting specialists improved their image and position within organizations.

2. The concept of activity-based costing, since its creation in the late 1980s, evolved from a cost measurement system of resources, activities and products into a management system based on activities. The stages of its evolution are as follows:

a) the concept’s development between 1984 and 1989 was a result of collaboration between university researchers and practitioners, who worked in CMS group; scientific description of case studies such as Schrader Bellows, John Deere Component Works, Weyerhouser and Kanthal also contributed to its development. The first-generation ABC system, which was shaped at that time, focused on improvement of product costing accuracy by means of greater accuracy of indirect costs calculation. Additionally, the system emphasized cost reduction by means of waste elimination and operational activity management by means of better performance measurement;

b) the second generation of ABC, which significantly differed from the first one, formed between 1989 and 1992. Instead of a concept which focused on accurate calculation of full product costs, the second generation of ABC offered two types of resources (provided and used) and activity hierarchy structure where significance of unit product cost calculation was lesser. Substantial differences between the two generations of ABC systems made some of the researchers and practitioners ignore these changes; they still perceived ABC systems as a tool which enabled accurate full unit product costing. Another group of researchers and practitioners regarded the second generation of ABC as a more developed version of the previous concept;

c) after 1992, the ABC concept underwent further changes and that enabled distinction of next generations of ABC. In the third-generation ABC, values influencing the level of activities are used for the purpose of competitive strategy by means of value chain analysis. Apart from being focused on adding value to products and accentuating the importance of value chain for making and implementing competitive strategy, the third generation of ABC characterizes of a special type of activities i.e. support activities;

d) various uses of information received from activity-based costing led to creation of activity-based management, in which data about activities and their costs provide information for making decisions in such areas as improvement of efficiency and effectiveness of activities performed in the company. It meant an evolution of activity-based costing, which evolved from product costing system into activity management system.

1. Origin and development of ABC