Using distribution costs in decision making at the Dennison Manufacturing Company, 1909 to 1949

              Accounting Historians Journal
Vol. 26, No. 1
June 1999
Gloria Vollmers
UNIVERSITY OF MAINE
USING DISTRIBUTION COSTS IN
DECISION MAKING AT THE DENNISON
MANUFACTURING COMPANY,
1909 TO 1949
Abstract: Early in the 20th century, predating most academic and
practitioner literature, Dennison Manufacturing's top management
recognized that certain kinds of distribution costs, normally treated
as part of general overhead and allocated based on prime costs,
were highly relevant for product-costing and pricing decisions. They
pulled as many identifiable direct costs of distribution as possible
out of the general overhead pool and assigned them to the appropri­ate
product lines as extra information for the managers of those
lines. However, these off-book assignments of costs were not fully
understood and caused misunderstandings for many years. New ar­chival
evidence allows us to see the frustrations of managers who
wanted to understand and use this information and how they at­tempted
to solve these problems.
Dennison Manufacturing Company, now a subsidiary of
Avery-Dennison, was founded in the mid-19th century. During
the first half of the 20th century, the period of this study,
Dennison manufactured a range of paper products including
tags, boxes, holiday goods, crepe paper, and seals and labels.
Dennison produced some five or six thousand items within
those product lines, half of them special orders and half
throughput, for a varied customer base. Vollmers [1993] dis­cussed
the company's treatment of distribution costs (both or­der-
filling and order-getting costs) based on published articles
by Dennison's statistician, E.S. Freeman [1929, 1933]. The
company's efforts within the area of distribution costing ap-
Acknowledgments: I would like to thank Editor Richard Fleischman and
two anonymous reviewers for the Accounting Historians Journal for their help
and encouragement. I would also like to thank Avery-Dennison's management
for granting access to its archive.
Submitted March 1998
Revised July 1998
Accepted August 1998