This article focuses on the conceptual framework which may prove better than analysis of variance which is considered to be very important in cost accounting. Conceptual framework is better because it distinguishes long-range and short-range factors, demonstrates the weaknesses of existing practices, sharply pinpoints responsibility in relation to the purposes of short-range planning and control and separates the role of physical measures of capacity from the role of valuation of that capacity, and indicates how a contribution-margin or opportunity-cost approach to valuation is superior to a unitized historical-cost approach. Organizations assemble human and physical resources that provide the capacity to produce and sell. These commitments often require heavy expenditures that affect performance over long spans of time. The implications for managers are twofold. First, careful planning. Second, the acquired capacity. Many fixed costs result from capital budgeting decisions, reached after studying the expected impact of these expenditures on operations over a number of years. The choice of a capacity size may be influenced by a combination of two major factors, first provision for seasonal and cyclical fluctuations in demand. Second, Provision for upward trends in demand.

This article focuses on the conventional methods of calculating depreciation often involve the arbitrary allocation of the historical cost of a fixed asset. The use of discounted cash-flow techniques has been advocated by a number of authors as the ideal basis for allocating the cost of an asset over its useful life. In the latter method, depreciation is regarded as the periodic reduction in the value of a fixed asset arising from a change in the asset's expected future benefits. Briefly, this method requires that the estimated future net services of the asset, including the scrap value, be discounted to their present value at the end of each accounting period. The future net services of an asset are the cash inflows of the business attributable to the use of that asset alone, that is, not attributable to other outlays, for example, for labor, materials, and maintenance or repair. This article examines the implications of changes in expectations for depreciation, first, when the discount rate is the internal rate and, second, when it is an external rate such as the cost of capital.

Reviews the book "Planning and Control With PERT/CPM," by Richard I. Levin and Charles A. Kirkpatrick.

Reviews the book "Accounting Theory: A CPA Review," by Benjamin Newman and Martin Mellman.

Reviews the book "Revenue Recognition," by Arthur L. Thomas.

Reviews the book "The Accounting Sampler: An Introduction," by edited by Thomas J. Burns and Harvey Hendrickson.

This article focuses on the product-costing aspects of process costing. First-in, first-out (Fifo) process costing has been overemphasized in cost accounting texts and in the Certified Public Accountants examination; it should be pruned from major consideration in courses and examinations. Fifo process costing is unnecessarily complex, is not used in practice, and is theoretically weak. Before examining the reasons for this position, it should be noted that this article concentrates on the product-costing aspects of process costing. It is concerned only incidentally with planning and control. By definition, process costing is a type of product costing that deals with the mass production of like units which usually move in continuous fashion through a series of manufacturing steps called operations or processes. The complexities and conflicts between weighted-average and Fifo costing methods are eliminated by using standard costs.