Philipp Plank analyses the question what drives the quality of cost-systems and is the quality
of cost-systems directly and at best positively related to the firms' performance. In other
words is it worth investing in complex cost allocation systems or are there environmental and
or production settings in which less enhanced systems perform adequately. Using simulations a
benchmark firm (first-best solution) perfectly allocating cost to products is compared to firms
implementing heuristic cost-allocation schemes (second-best solution) to identify the profit
gap resulting from decisions based on limited information. Into this discussion the idea of
cost-stickiness is integrated thereby indicating a new planning approach.
