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Cost Accounting in Anglophone Subsidiaries

Empirical Evidence from Germany


Moritz Schröder

Cost accounting in Anglophone countries is in general less detailed than German cost accounting. Such cross-national differences imply a tension for Anglophone multinationals operating in Germany. These firms have to balance the group-wide application of their home-country traditions and the approval of diverging local cost accounting systems. By the means of a dyadic research design, this study finds empirical evidence for Anglophone cost accounting traditions to prevail in subsidiaries of Anglophone multinationals in Germany. However, the top management teams in these subsidiaries tend to work around such coercive pressures. The findings also suggest that the subsidiaries prefer to deviate from their parent companies’ traditions to ensure the usefulness of information for their cost accounting systems.
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2 Cost accounting in Germany and Anglophone countries


2.1 Introduction

Internationally, cost accounting refers to the measurement, analysis and reporting of the use-up or sacrifice of organisational resources in monetary terms (i.e. costs), which is induced by production of goods and services (i.e. a specific goal) in a certain period.68 Cost accounting’s core is to provide information that facilitates or influences decision-making69 during the management process.70 As such, it is linked to internal planning and control (incl. plan execution) activities.71

Cost accounting in organisations can be regarded with respect to the determination of the value of resources used and sacrificed as well as the inclusion of yielded cost information in decision-making.72 The former comprises the determination of costs itself, i.e. their accumulation and assignment to organisational units, goods and services, as well as cost classification according to certain categories. The latter subsumes the use of information derived from a cost accounting system. In this study, technical aspects of cost determination will be labelled as cost accounting system design (A). The use of cost information will be labelled accordingly (B). This differentiation is equivalent to the distinction of (A) macro/mezzo and (B) micro levels of management accounting research.73

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