Paul F. Anderson VIRGINIA POLYTECHNIC INSTITUTE AND STATE UNIVERSITY
DISTRIBUTION COST ANALYSIS METHODOLOGIES, 1901 -1941 *
Abstract: The attempt to develop cost analysis methodologies for the marketing function began at the turn of the century. Early attempts followed the pattern of factory cost analysis and progress was slow until the break-through in the years 1940-1941.
The first 20 years in the development of the methodologies of distribution cost analysis were characterized by the attempts of cost accountants to apply the costing methods of the factory to the marketing function. The early development of the area was domi-nated by cost accountants, and the most natural approach for them to take was to employ the methods with which they were most familiar. While they recognized the inherent differences between the production and marketing functions, the pioneer writers in the field felt that the similarities were greater than the dissimilarities. As such, the early work in the area was little more than an applica-tion of the developing production costing methodologies to the problem of distribution cost accounting. The early writers were fully cognizant of the fact that they were exploring a new area, however, and there was much disagreement in the early years concerning the proper approaches to be used and the correct methodologies to employ. Indeed, it could be said that as of the end of the 1920s there was no "generally accepted" system of distribution cost ac-counting.
To see how the methods of distribution cost analysis evolved from production cost accounting, we must go back to the turn of the century. One of the earliest discussions of the subject is to be found in an article published by Alexander Hamilton Church in The Engineering Magazine in 1901.1 The article is entitled "The Proper Distribution of Establishment Charges" and is the last in a
*Based on a paper of the same title presented at the 1978 Annual Meeting of the American Accounting Association and published in its Collected Papers.