Resource Consumption Accounting Where Does It Fit?

Main Article Content

David Perkins
O. Scott Stovall

Keywords

Resource Consumption Accounting (RCA), Activity Based Costing (ABC), Theory of Constraints (TOC), Product Costing

Abstract

With the increasing sophistication of recent costing innovations, such as resource consumption accounting, the selection of a costing system can be a daunting decision as one seeks to choose the appropriate costing methodology for a given (1) decision context, (2) production environment, and/or (3) information system available to a firm. Taking a big picture perspective, this article illustrates the distinguishing features of RCA, ABC, and TOC as compared to the traditional costing approach (as a benchmark) and attempts to offer some basic guidance as to when each system may be appropriate. This comparative presentation of RCA is designed to provide time-pressured management accounting practitioners a frame of reference for considering RCA (or one of the other methodologies) prior to a more in-depth investigation. Managers may also use this comparison to support organizational efforts to train staff with varying levels of management accounting background on the similarities and dissimilarities between the various product costing alternatives. Finally, we believe this presentation can benefit teachers of cost accounting who are interested in exposing their students to the conceptual differences between RCA and the other costing methodologies.

Downloads

Download data is not yet available.
Abstract 1073 | PDF Downloads 976