Reviewed by Ashton C. Bishop James Madison University
This book, a published doctoral dissertation, examines the effect of scientific management on the evolution of standard cost accounting. The objective was to provide a clear exposition of the impact that the scientific management movement had on the development of the standard cost system.
The hypothesis of the study, that the scientific management move-ment had an important effect on the development of the standard cost system, was examined using two methods. The first method entailed an exhaustive search of the literature of the time which included professional, academic, and popular journals as well as unpublished manuscripts. The second method employed was the case method which included an analysis of existing documents such as accounting forms, correspondence, and reports. The study period included the years 1875 through 1920.
Accounting literature prior to 1910 showed little acknowledgement of standard costs. It was shown that the development of standard costs generally accompanied scientific management in the literature following the Eastern Rate Case hearings of 1910. The association of “scientific management” with its principles was primarily due to efforts of Louis Brandeis, one of the attorneys opposing proposed railroad rate increases. His position was that operating costs could be substantially decreased by the application of the principles of “scientific management.” After the hearings, scientific management ideas spread and more accounting literature was seen referring to standards. The contributions of such notables as Harrington Emerson, Sterling Bunnell, Clinton Scovell, and Charter Harrison were reviewed and the discussion showed the important impact that scientific management had on the development of standard cost accounting .
Case studies were used to document the use of standard cost concepts in business organizations that implemented Frederick W. Taylor’s system of scientific management. Most of the material ex-amined was from the Taylor Collection at the Stevens Institute of Technology. Relevant documents relating to Midvale Steel Company, Manufacturing Investment Company, Bethlehem Steel Company, Eastern Manufacturing Company, Link-Belt Company, and H. H. Franklin Company showed Taylor’s influence on the develop-ment of standard costing. The documents also provide evidence that standards were used in industry prior to their discussion in the literature.
The findings of this study were that scientific management had an important and direct effect on the evolution of standard cost accounting and that scientific management preceded the development of the standard cost system.
This book is well organized and researched. It should be of interest to anyone who wishes to understand the historical development of standard cost accounting. The book would be a good addition to the holdings of any college or university library and could appropriately be considered as one reading in a management accounting seminar.
