Cost accounting at the end of the 19th century
The Case of the spanish company trenor y cía (1838-1926)
DOI:
https://doi.org/10.26784/issn.1886-1881.v3i4.203Keywords:
Cost accounting, 19th century, Trenor y Cía. company, factory booksAbstract
The main purpose of this study is providing empirical evidence on the evolution of the cost accounting systems and on the role of the accounting information as an essential tool for the management and development of companies. To this end we have investigated the case of Trenor y Cía., one of the most relevant companies in terms of its contribution to the agricultural and industrial development of the Valencian economy in the 19th century The company initially settled down in a silk factory and was dedicated to import and export agrarian products, mainly raisins exportation, and to the bank business. Nevertheless, in the last decades of that century, it started the production of sacks, as well as chemical fertilizers, activities that provided the greatest benefits to the company.
The cost information of this company was prepared in factory books, it used the double entry system and employed accounts related to the formation of the production cost, that was calculated periodically. The main characteristics of the cost accounting of Trenor y Cía. in the period under study, are the following ones: the determination of costs and results by activity segments; the distinction between general and specific assets and the imputation to the segments of the corresponding expenses and incomes; the establishment of transfer prices; the systematic distribution of the indirect costs, although it is necessary to emphasize that in this company the general expenses did not represent significant amounts.
Taking into account the documentation under study, we have adopted a neoclassic economic approach, so that we think that the development in Trenor y Cía. of the cost accounting system, can be mainly explained by economic reasons. Thus, when the company started to grow and to be diversified, it was necessary to develop a system of costs and results allocation by activities that could allow owners to evaluate their efficiency as well as the people in charge in the diverse locations. In addition, the very detailed content of the cost books made them highly appropriated to identify wastes and leakages. We have not found any evidence on the use of the accounting figures to exert a disciplinary power on the company personnel and to stimulate productive improvement, which can be due to the content of the archive studied. We have not obtained evidence about the calculation if cost standards nor budget costs.
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