Activity-based costing and management are now the stock-in-trade of a lucrative industry, with at least one Big Six consultancy operation devoted wholly to their promotion. Both techniques represent a major extension of accountability in the modern corporation, into a zone previously defined in accounting terms as fixed overhead. The mechanics depend on treating the staff department as a mass-producer of repeated acts of routine service (‘activities’) performed ‘for’ particular cost-objects, usually products. By treating these activities as performance indicators, payroll budgets can be linked to activity volumes thus creating pressures for the casualisation of staff employment. The activity frame of reference, particularly when linked with ‘value analysis’, also encourages the stripping-out of all staff work which cannot be accommodated within its definition of activities. This threatens a dumbing-down of staff departments in which non-routine initiatives aimed at competitive advantage in fields such as human resource management or marketing may be stifled because they cannot be accommodated within the language of accountability imposed by ABM. These arguments are concretised through an examination of the ABM treatment of one of its favoured targets: the purchasing function. The contrast between this and the supply chain management approach advocated by practitioners and academics who take the function seriously is a stark illustration of the limitations of ABM as an approach to the management of staff activity.

Through a detailed critique of Johnson & Kaplan's Relevance Lost, (Johnson, H.T. & Kaplan, R.S., Relevance Lost: The Rise and Fall of Management Accounting (Boston, MA: Harvard Business School Press, 1987)), based upon labour histories of control within North American firms, this article identifies major deficiencies in conventional historical studies of cost and management accounting and offers possibilities for their resolution. After noting the limitations of transaction cost theory for the theorisation of organisations and their history, the paper argues that accounting controls were not a consequence of economic or technological imperatives, but rather were rooted in struggles as firms attempted to control labour processes in various epochs of capitalistic development. Cost accounting developments are related to the destruction of internal subcontructing and craft control of production in early factories, the advent of “Scientific” Management and homogenised labour and, post-1930, with an accord between primary sectors of labour and corporations, which led to an increased emphasis on monopoly pricing, smoothing production and hence employment patterns, and a shift of economic pressures to secondary labour and producer markets. The paper concludes by arguing that, in the context of today's globalisation of capital, control associated with the labour and capital accord are being abandoned as corporations experiments with new methods and ideologies of control which are reflected in current fashions in accounting research.