OPPORTUNITY COSTS, UNCERTAINTY, DECENTRAL ORGANIZATION - REASONS FOR A REVIVAL OF THE FULL COSTING PRINCIPLE

Although the full cost principle as a decision support instrument has been rejected by business science for long, it enjoys, even nowadays, a lasting popularity in the dairy practice. It is investigated whether there exist decision situations in which the use of full costing info rmation is logically justified. For centralized decisions full costing data basically induce wrong decisions. Although the costing system us ing investment appraisal methods allows to further recognize additiona l direct costs in the accounts and to consider limited decision depend encies, it does not justify the use of the full costing principle. For the examination of decisions taken under risk by a rise avers decisio n maker, overhead costs, besides direct costs, are relevant for the de cision, also for short-term production decisions. However, these overh ead cost can only be considered as a whole in their relation to the ri sk-utility function of the decision-maker. An allocation to the indivi dual products is not justified. If decisions taken upon information fr om different sources are investigated, an exclusive consideration of d irect costs leads to false data delivered by the division managers to the central division and thus to an excessive production. Taking into account overhead costs and their allocation to the individual products according to the Groves algorithm avoids a conflict between individua l and global interests and thus offers a solution to the information p roblem. Even if full costing is partly justified, it should only be us ed as a complement to the direct cost accounting as it is not able to support decision models. It can merely be interpreted as a foresight f or situations with nonexisting decision models. Therefore it is recomm ended to dairy industries to recognize in the accounts the correspondi ng direct costs of the different reference objects according to the Ri ebel'schen System of basic calculation and to merely consider full cos ting principle as a complementary instrument.