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Innovating cost accounting practices in rail transport companies

Antonella Cugini (Department of Economics and Management, University of Padova, Padova, Italy)
Giovanna Michelon (Department of Economics and Management, University of Padova, Padova, Italy)
Silvia Pilonato (Department of Economics and Management, University of Padova, Padova, Italy)

Journal of Applied Accounting Research

ISSN: 0967-5426

Article publication date: 9 September 2013

2890

Abstract

Purpose

The purpose of this paper is to present and discuss an accounting innovation in the cost measurement system of rail transport companies.

Design/methodology/approach

The authors identify the distinctive features that cost accounting systems should have in order to capture the particular structure of the production process of rail transport companies and develop an innovative accounting practice that addresses the specific features of railway services, particularly the high fixed costs associated with the infrastructure. This accounting innovation is applied to Trentino Trasporti, a medium-sized, privately owned passenger railway company operating in the Trentino Alto Adige region of Italy.

Findings

Evidence suggests that the new accounting practice facilitates the operational connection between the company's resources and their consumption during the provision of transport services.

Practical implications

This connection enables companies to identify new opportunities for improvement and cost optimisation by finding the real origins of cost consumption in the provision of rail transport services.

Originality/value

The case analysed also shows the necessity of integrating activity-based costing (ABC) with an accounting innovation that can represent the resources consumed by the various elements of the infrastructure that support the provision of services. This innovation has important managerial outcomes for all service companies that operate with an infrastructure network, including transport, service, and utility companies, and useful implications for the accounting profession that deals with cost systems in networked-based companies.

Keywords

Acknowledgements

JEL classification – M41 The authors thank the managers of Trentino Transporti for the availability of data and for their support. The cost accounting system analyzed in the article has been applied by Donatella Detassis – in charge of Management Control and Internal Auditing – to whom the authors are extremely grateful and thank for the precious collaboration. The authors are also most grateful for the helpful comments and suggestions from four anonymous referees and the Editor, as well as those from participants at the 9th Manufacturing Accounting Research conference “Cost and Performance in Services and Operations” and at the 2009 SDA Bocconi School of Management workshop “Innovating Management & Accounting Practices”.

Citation

Cugini, A., Michelon, G. and Pilonato, S. (2013), "Innovating cost accounting practices in rail transport companies", Journal of Applied Accounting Research, Vol. 14 No. 2, pp. 147-164. https://doi.org/10.1108/09675421311291892

Publisher

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Emerald Group Publishing Limited

Copyright © 2013, Emerald Group Publishing Limited

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