Costing in the early Industrial Revolution: gradual change to cost calculations at US cloth mills in the 1820s

This study details cost accounting practices at a number of US cotton mills in the 1820s. While some extant literature suggests that these practices were akin to management accounting, we take a different view. Drawing on an institutional lens and reverse engineering of cost calculations, we argue that these practices were indeed institutionalised, but that a merchant mindset on costs and profits was engrained within them. Cost calculations were based on the comparative quality of cloth, and costs were not traced to a particular product. However, gradual change took place from about 1830 on, when cost calculations became more specific to particular products, possibly as a consequence of external economic forces.