ABSTRACT
The design of product cost systems has received considerable attention since the emergence of activity-based costing (ABC) in the late 1980s, as evidenced by the significant number of articles published in professionally oriented journals and, to a lesser extent, in academic journals (Lukka and Granlund, 2002; Bjornenak and Mitchell, 2002). Compared to the professional world, the reception of ABC by academia has been much more cautious and critical (Bjornenak and Mitchell, 2002). One distinct academic contribution which the ABC innovation has initiated has been the use of mathematical analysis to specify the conditions under which a costing system can generate relevant costs for decision-making. Such a specification provides the basis for assessing the validity of claims made for the advantages of activity-based and, indeed, other types of costing system.
