ABSTRACT
The case study presented in this chapter traces the eighteenth century activities of the Carron Company, a firm that utilised superior cost management during the Industrial Revolution. The Carron Company records reveal plentiful examples of cost management, mostly centred in the 1759-1786 period during which time Cadell, Garbett, and Gascoigne were at the helm. Prior to 1786, the Carron records reflected correct instincts about cost accounting methodology, but they failed utterly to integrate costing with acceptable financial reporting. Consistent with the financial exigencies Carron Company experienced in its early years, its business records and partnership correspondence evidence an acute concern over the need to control operating expenses. Cost management processes in Carron appear to have been motivated by the firm's early problems with securing adequate partnership capital, attaining profitability, and maintaining liquidity. The vital concern with cost management was evident in the many examples of cost analyses and estimates designed to evaluate the profitability of products and business segments.
