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ACTIVITY-BASED COSTING (ABC) IS a method of analysing business operations that leads to cost calculations based on activities. This article suggests an approach different from the basically Anglo-Saxon ABC by showing that the originality of French management accounting techniques and practice can enrich ABC as it is practised in the US, the UK and Australia.
New ideas, concepts, and models regularly wash up on the shores of the world of management. These have frequently originated in the US -- for example, management by objectives or zero-based budgeting. More recently they have come from Japan as well -- for example, Quality Circles or Just In Time. Yet very few of these concepts which are touted as being key to management success leave any impression on French management practices. Why is this? Two answers can be given. First, they have not yet been sufficiently analysed; and, second, they originate in management and cultural contexts that are so different from those in France that they cannot be directly applied to the French situation.
Regarding the first argument, it must be stated that all too often we are concerned only with the result of the technique and do not undertake to analyse the processes underlying its effectiveness. If there is a lesson to be learned from the Japanese, it is that we cannot be satisfied with such an attitude. Furthermore, the significance of the results obtained from the techniques is often open to interpretation.
As to the second argument, it must be stressed that no management tool or method ever exists in a vacuum. They are always born of necessity or invented by people working within the constraints of a specific context.
Having said that, let us now consider Activity-Based Costing itself. ABC originated in the US -- most likely it will be followed by Functional Cost Analysis -- a Japanese concept.
In the argument to be presented here, ABC will first be situated in its Anglo-Saxon context (reflecting the arguments of the debate about it currently going on in the US and the UK). In a second section, the distinctive characteristics of French management accounting practice will be highlighted. The third and final section will offer a synthesis of both approaches which taken together could enrich the ABC...