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About RCA

What is RCA?Why is it Different?CasesFAQ

 

Introduction

Resource Consumption Accounting is a new management accounting approach that provides managers with enterprise optimization information by combining the learning, proven application, and sound decision support principles that permeate management accounting’s rich history. The approach was conceived around the year 2000 primarily as an amalgamation of German Grenzplankostenrechnung (GPK) and U.S. Activity-Based Costing (ABC) practices. RCA then spent the next seven years in an incubator environment to validate and refine its principles, concepts and methods through practical case studies and research.   See the definition of RCA in Wikipedia.

Please consider viewing a short webcast for an introductory presentation on RCA:
Part 1.A: What is RCA? (7 min)
Part 1.B: What is the RCA Institute? (7 min)
Part 2.A: RCA Modeling Principles, Part 1 (9 min)
Part 2.B: RCA Modeling Principles, Part 2 (10 min)
Part 3: RCA Model Overview (8 min)

In July 2009, Resource Consumption Accounting was recognized in the new International Federation of Accounting’s International Good Practice Guide: Evaluating and Improving Costing in Organizations; and n the companion Information Paper to the IGPG, Evaluating the Costing Journey: A Costing Levels Continuum Maturity Model, RCA is evaluated as the most sophisticated costing approach on the continuum.


RCA brings to the management accounting profession both proven and innovative new concepts.

 

The proven concepts include:

  1. GPK’s quantity-based modeling and cost behavior concepts, including exceptional marginal cost and profitability analysis.
  2. Professor Gordon Shillinglaw’s concept of attributable cost.
  3. Process modeling (where necessary and valuable) using activity based techniques.

The key innovations include:

  1. The elevation of cause and effect as the guiding principle for RCA ensuring clear linkages between operations (support and production) and their costs.
  2. The concept of value chain integration of management accounting into operational systems.
  3. Eliminating dependency on the General Ledger for management accounting information.
  4. Replacing the principle of variability with the principle of responsiveness for operational modeling and modeling consumption behavior.
  5. Clearly defined rules guiding and limiting the use of activity-based concepts.

The library on this website contains valuable articles that discuss these concepts and their integration into RCA.

RCA is formally defined as a dynamic, fully integrated, principle based, and comprehensive management accounting approach that provides managers with decision support information for enterprise optimization.