On the evaluation of savings: The role of numeracy

This paper aims to contribute to the stream of the “costing system change” research agenda by studying the role played by contextual factors, adopting a demand-side approach (Ax and Bjørnenak, 2007), and by highlighting the movements of change in the adoption and use of Activity-Based Costing (ABC) and Target Costing (TC) (Burns and Vaivio, 2001; Schoute, 2011). Thus, the possibility of costing change with ramifications beyond those typically studied in the literature concerning the functional view of cost accounting is discussed and demonstrated (Sturdy, 2004; Tsoukas and Chia, 2002). This paper compares the results of two surveys over a decade apart on two samples of large-size manufacturing companies (132 and 86 companies, respectively) that investigated changes in cost objects, costing purposes and the adoption and use of two advanced costing techniques, ABC and TC. The findings reveal an increase in the number of cost objects considered, a wider use of cost information for managerial purposes and a slight increase in the use of ABC and TC in the sample. The discussion shows an increase of awareness of potentiality of cost information to support decision-making, and a refinement of cost allocation processes. The presence of “forward” and “backward” movements of ABC and TC changes in adoption and use, addresses the possibility that costing change has different directions than those usually considered under a rational view of cost accounting.