Kaplan And Johnson s Theory Of Management Accounting

Introduction Kaplan and Johnson’s theory in 1987 for management accounting system has been dubbed one of the most prominent academic publication to date. Activity Based Costing Otley (2008) explained that management accounting was obsolete and managers were encouraging the sale of unprofitable products and neglecting profitable products. The managers were unaware of the situation due to the traditional costing system that gave the wrong information. Traditional costing’s method for cost allocation is mainly based on direct labour hour which meant dividing using direct labour cost and would eventually lead to inaccurate information for managers. Kaplan and Johnson then develop Activity Based Costing (ABC) to provide a more accurate information for managers. The ABC would show a profitable product under traditional costing to be in fact unprofitable and vice-versa. Their academic publication lead to major change in management accounting, there were more management accounting development and publication in 20 years when compared to the 20 years before their publication. Kaplan and Johnson suggested that the poor academic publication on management accounting around the year of 1925 was the main setback for management accounting. According to Lowry (2008), Kaplan and Johnson failed to take into account that the progress technological advances this century. They also failed to take into account the relationship of other industries for management accounting, Kaplan and Johnson’sShow MoreRelatedIf You Cant Measure It You Cant Manage It1520 Words   |  7 Pagesacademic expert; Deming, Drucker, Kaplan, this is another list that could go on, however, this is a statement that has not been made without critism. 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