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Abstract
As business becomes increasingly global, it is important for managers to appreciate that practices that work well in one country may not work as well in other countries. This article compares cost center practices under Grenzplankostenrechnung (GPK), a common approach to cost accounting in Germany, and typical cost center practices in the United States. Differences between Germany and the United States on Hofstede's uncertainty avoidance dimension and in workforce and management education provide possible explanations for differences in the responsibility assigned to cost center managers between Germany and the United States. Differences in cost center practices concerning classification of costs, measures to use when considering changes in costs, and the size and scope of the cost center between Germany and the United States all support these differences in cost center manager responsibility.
Keywords: cost centers, German cost accounting, Hofstede, responsibility accounting
Introduction
Although business is global, differences in countries may mean that the practice of business is not universal. Certain country differences can impact the effectiveness of managerial accounting practices and, as a consequence, affect the appropriateness of the practices. These country differences include differences in culture, defined using Hofstede's taxonomy (2001), and workforce and management education, which are discussed in the present paper. Failure to recognize the impact of country differences on the appropriateness of managerial accounting practices may lead to a number of dysfunctional actions. A company may benchmark against the wrong set of companies. Managers and accountants may accept "one size fits all" solutions which do not fit all situations. Companies may implement homecountry practices in subsidiaries located in countries where the home-country practices will be ineffective. The last decade's growth in international managerial accounting research (Haka and Heitger 2004, 21) is a sign of the potential importance of recognizing the impact of country differences on differences in managerial accounting practices.
This article considers the impact of country differences on differences in cost center practices between Germany and the United States. The goals of the article are to 1. describe cost center practices that are an important part of Grenzplankostenrechnung (GPK), a common approach to cost accounting in Germany, 2. contrast these practices with cost center practices commonly employed in the United States, and 3. offer possible empirically testable...