Abstract In selecting a measure of activity to be used in applying manufacturing burden to product, a typical cost accounting text includes a few brief remarks about direct labor hours, direct labor cost, machine hours, and units of product. The fact that machinery is the main factor in production does not necessarily mean that machine hours is a measure of activity which provides more accurate costing than does direct labor hours. Cost accounting texts, in their discussion of machine hours versus direct labor hours, frequently seem to avoid the real issues. Very often, unless the instructor amplifies the textbook statements considerably, it is likely that the student will not get a satisfactory answer to the basic question. One of the issues which has not received its fair share of attention is the general superiority for product costing purposes of rates established by machine cost centers which include only homogeneous equipment over a single rate established for a department which includes heterogeneous equipment. It has been argued that machine hours is a better basis than direct labor hours under the following conditions, the process is a relatively continuous one; and cost responsibility centers include heterogeneous equipment and burden rates are established by cost responsibility centers.

Reviews the book "Standard Costs for Manufacturing," by Stanley B. Henrici.

Reviews the book "Cost Accounting," 2nd ed., by Charles F. Schlatter and William J. Schlatter.

Abstract The article presents observations of the author on a break-even Chart. The author believes that less emphasis should be placed on the specific break-even point and the attention should be on the probable profit or loss results of alternative courses of action. Break-even points are not necessary in arriving at intelligent decisions which involve cost-volume-profit relationships. Break-even points do exist and for this reason, it may be of academic interest to know what they are. But if they can be used, it is suggested that there is almost invariably a better approach to the problem. The author suggests that Break-even charts should be accompanied with detailed budgets and used with considerable caution only when the assumptions underlying the charts are thoroughly understood. Of more importance, however, is the placing of emphasis in planning on the relative profitability of alternative courses of action rather than the break-even point. The author concludes that to compute a break-even point, recognition of whether or not a knowledge of the point is pertinent to a decision faced by management and if it is pertinent, in what way is required.

Abstract The article talks about a proposal for determining the significance of variations from standard. A primary function of cost accounting is to furnish information which can be used as a basis for action by appropriate supervisory personnel in controlling costs. Many managers, consistent with their intimate knowledge of operations, undoubtedly have developed rough gauges by which they measure performance; however, this "judgmental factor" is often not supported by objective evidence. Therefore, what may be an outside limit in the mind of the manager may or may not be justified by the historical facts. The potential uses of statistics in the area of cost control is gaining recognition. It may be that quality control techniques can be drawn upon in reaching a satisfactory solution to the problem under consideration here. The use of statistics will make possible a mathematical and orderly evaluation of the historical data; moreover, statistical quality control permits the division of the total variation of quality characteristics into chance and assignable variation. Cost accounting should be expanded to include interpreting the significance of variations. It may be helpful if objective methods can be developed which will facilitate the selection of those variations which should be explained.

Reviews the book "Proceedings of the Seventeenth Annual Institute of Accounting."

Abstract This article focuses on the role of certified public accountants (CPA) in management services. Demands on businesses have multiplied over the years as a result of the changing nature of competitive markets, rapid developments in technology of production equipment, availability and increased use of high-speed computers, expansion of knowledge in almost every field of learning, and a constant increase in the number, variety, and complexity of laws affecting business operations. Yet, in spite of all the encouragement given by professional organizations, the cries of business managers for more help and the cold statistics on the volume and lucrative rewards of the consulting business, many CPA have apparently not entered this field nor are they relatively frequently called upon by firms seeking consulting services. Some CPA firms are very active in rendering management services, but the number of firms who are is quite small. Further- more, revenue received by a CPA for management services is a very small portion of the total annual fees of $550 million paid by businesses for consulting work, as well as a small percentage of the total revenues realized by a CPA.