Since the 1950s, traditional cost and performance accounting has experienced a real boom. Whereas relatively simple and only a few systems existed in the past, the various methods and approaches virtually exploded in the following years. The main drivers were the universities, which provided a wealth of new approaches and impulses with well-equipped chairs. Companies were quite interested in the new approaches, as they promised much better control of the company’s goals, especially the contribution margin calculation and pricing policy.
Small and medium-sized enterprises have always been faced with the problem of building up the necessary capacities for such new and usually complex systems. They were also quite helpless in the question of which of the systems in fashion was the right one. Many questions had to be answered: full cost accounting or partial cost accounting or both? If full cost accounting, then planned costs or actual costs? If partial costs, then direct costing or profit center accounting? Or quite differently in the direction of activity-based cost accounting, which was considered the supreme discipline for a number of years? Final confusion was then caused by Riebel’s famous relative individual cost accounting, a favorite topic of all university professors and the horror of students.
Ultimately, however, large companies also suffer from this biodiversity, because the uncontrolled growth in the controlling departments can hardly be controlled from a certain point on. Interesting and also for SMEs is the tendency for companies to return to simplicity. A good example is the jam manufacturer Zentis. Faced with the problem of uncontrolled growth, it was decided to return to simplicity in the form of standard cost accounting. The common criticism of this cost calculation is obvious: The prices for fruit vary greatly from region to region and season, so how can you use it to define standards sensibly? Accordingly, a (more complicated) system such as actual cost accounting is almost obvious.
This is exactly where Zentis comes in and claims the opposite. Such systems are doomed to failure due to market fluctuations. Once a year, the price is calculated using only standard cost accounting and analyses can be started immediately. Volume losses are then no longer laboriously searched for in the direction of price fluctuations in raw material prices, but can be derived directly (from other causes).
What is the consequence of this for an SME? It is better to operate a supposedly simple cost accounting system and use it to effectively evaluate and control the company than to set up complex systems that meet the highest theoretical requirements but are hardly practicable.
What experiences have you had? We look forward to your comments!
Image source: Fotolia.com, Photographer: kikkerdirk
