A Closer Look at German Cost Accounting Methods - Seeing this ...

are the most widely used practices by firms indicatingthey employ the GPK method (see Table 1). Here is alist of GPK practices in order of use by those firms:◆ Using contribution accounting (90%)◆ Analyzing variances by cost center (90%)◆ Using planned (standard) costs for most costingpurposes (77%)◆ Analyzing the consumption (total demand) foreach cost center (71%)◆ Having at least one output measure for each costcenter (64%)◆ Separating fixed and proportional costs for eachcost center (62%)◆ Assigning indirect costs based on many cost centersand a network of cost assignments (57%)◆ Transferring costs from support cost centers toprimary cost centers while maintaining distinctionbetween fixed and proportional costs (57%)◆ Identifying and computing the cost of idle capacity(49%)These percentages suggest that not all of the GPKpractices are used in each case. Many of the firms surveyedhave simplified and adapted GPK theory to theirown practical needs. For instance, some firms makeassumptions that cost centers are either fixed or variable(i.e., no mixed cost centers). Thus, they do not separatethese cost types within cost centers.GPK A DOPTERSTo analyze the implementation of a costing system suchas GPK, two steps are necessary: (1) determining whohas tried GPK (i.e., “adopters”), and (2) identifyingwhat stage(s) of implementation constitutes usage (i.e.,“users”). In the case of GPK, some companies appearto use all the classic GPK practices, but others may onlyuse those they feel are appropriate for their situation.Furthermore, two firms may apply essentially the sameGPK practices, yet one might use the information on adaily basis while the other uses it only occasionally. InTable 1, we see that firms identifying their costingmethod as GPK do not all use all of the GPK practices.We also see that firms not calling their costing methodsGPK do use many of the associated practices.To define GPK adopters, we conducted site visits tobetter understand why some firms that appear to usemost or all of the GPK practices did not label their costingsystem as GPK. One reason is that some firms associateGPK with the tool in SAP’s CO moduledeveloped in association with Plaut Consulting. Anotherreason is illustrated by AVU, a small utility companyin Gevelsberg, Germany. Thorsten Sebo, head of Controlling,explained that many people associate GPKwith Wolfgang Kilger, a leading German academic inthe field of cost accounting, and, therefore, consider itto be very theoretical. Kilger’s theory is that variablecosts have to be strictly proportional with output, as inthe marginal cost of the last unit (i.e., the Grenzkosten ofGPK). Sebo said that AVU’s system is better describedas Plankosten (planned costs) and is based on an approximatemeasure of activity (e.g., an operational measuresuch as hours). This approach is associated with HansGeorg Plaut, the former automotive engineer whofounded Plaut Consulting, and is considered morepractical.Another reason is illustrated by Gebrüder BodeGmbH & Co. KG in Kassel, Germany, which makesdoors for trains, buses, and cars. Although the companyis essentially doing all the GPK practices addressed inthis study, its controller said Gebrüder Bode’s costingsystem is not GPK because almost all of its manufacturingis for specific customer orders. His comment was,“GPK cannot be used because we have many differentproduction methods and a lot of small-scale customerprojects.” He explained that bus and train door ordersare generally for 300-500 units, and these may vary bycolor, lighting, features, etc. In his opinion, you cannotdo GPK in this situation because you cannot planfuture production costs or set standards as you can for amore long-term product.For these reasons, we did not limit identification ofGPK adoption to those firms that labeled their cost systemas GPK. Instead, we asked respondents to identifythe implementation stage that best described theircompany’s situation regarding GPK. To define an“adopter” of GPK, we chose the stage, “Implementedthen abandoned” (Implementiert, dann jedoch aufgegeben)or higher. We chose this stage even though these firmsabandoned GPK because it means they did try it, butfor some reason (to be analyzed later in the “user”analysis) the implementation was not successful or sus-MANAGEMENT ACCOUNTING QUARTERLY 40 F ALL 2008, VOL. 10, NO. 1