The Decision Put Forward By Robert S. Kaplan

2682 Words11 Pages
In the following essay I will be looking at the arguments put forward by Robert S. Kaplan and others on why management accounting techniques had lost their relevance to organisations by the 1980s. Since the 1980s new management accounting techniques have been developed, I will be looking at two recent developments in management accounting and assessing whether they have sufficiently addressed the concerns raised by Kaplan and if they have improved the usefulness of management accounting in organisations. Kaplan and Johnson believe that the origin of modern management accounting is traced to the emergence of managed, hierarchal businesses in the early 19th century. The need for planning and control arose in textile mills where cost of product was allocated to worker productivity, raw material use and plant layout. It was because of the factory locations being so far away for the head offices that an information system was required to be used as a judge of efficiency of the factory workers. The rapid growth of railroads established performance measures in the form of cost per ton mile, cost per passenger per mile and ratio of operating expenses to revenue (Waweru, 2010). Shortly afterwards the mass production of steelworks introduced direct cost measures and standard costing. From this we can see that management accounting evolved as a tool to motivate and evaluate the efficiency/effectiveness of internal processes. Kaplan and Johnson didn’t believe that management accounting
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