An Italian Forerunner of Modern Cost Allocation Concepts: Lorenzo De Minico and the Logic of the 'Flows of Services'

Accounting, Business & Financial History, Vol. 12, No 1, pp. 95-111, March 2002

Posted: 8 Sep 2007

See all articles by Lino Cinquini

Lino Cinquini

Scuola Superiore Sant'Anna- Institute of Management

Alessandro Marelli

University of Teramo

Abstract

This article provides an analysis of the thoughts of an Italian academic who lived in the first half of the twentieth century, Lorenzo De Minico, in particular it regards his approach to the allocation of common costs. De Minico's main concern was with the conventional, subjective allocation methods proposed by Italian practitioners and academics of his time. He valiantly searched for a methodological approach based on using causality as the basis for linking costs to cost objects. The most interesting finding of De Minico was the concept of 'flows of services' and his commitment to offering a convincing answer to the problem of general or common cost apportionment that went beyond 'traditional' criteria. De Minico's 'flows of services' referred to the outputs of resources consumed in indirect services. These indirect costs can be considered easily 'directly attributable' only if it is possible to measure the connected 'flows of services'. The article shows that the concept developed by De Minico in early twentieth century of Italy confirms the idea that some theoretical frameworks for a causal allocation of common costs were in existence many decades before information technology made such systems a practical proposition.

Keywords: early twentieth century, Italy, cost accounting, common costs, allocation methods, flows of services

JEL Classification: M49, B29

Suggested Citation

Cinquini, Lino and Marelli, Alessandro, An Italian Forerunner of Modern Cost Allocation Concepts: Lorenzo De Minico and the Logic of the 'Flows of Services'. Accounting, Business & Financial History, Vol. 12, No 1, pp. 95-111, March 2002, Available at SSRN: https://ssrn.com/abstract=1012861

Lino Cinquini (Contact Author)

Scuola Superiore Sant'Anna- Institute of Management ( email )

Piazza Martiri della Libertà, 24
Pisa, 56124
Italy
+39 050 883969 (Phone)
+39 050 883936 (Fax)

HOME PAGE: http://www.idm.sssup.it/cinquini/

Alessandro Marelli

University of Teramo ( email )

Campus Coste S. Agostino
Via R. Balzarini 1, Località Colleparco
Teramo, TE 64100
Italy

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