FORECASTS of productivity changes are usually made by extrapolating time series. For individual industries productivity fluctuates widely from decade to decade1 and the extrapolation method is vulnerable. An alternative is to use leading series. In an earlier study it has been shown that a well-defined time lag exists in the cotton textile industry among the estimates of productivity from engineering data, plant data, and industry data.2 Leading best-practice series, unfortunately, are hard to come by. But the results have suggested a third alternative: the forecast of productivity changes in industries by studying the diffusion of more advanced technology among plants.3 The present paper is an attempt to develop and test a framework by which productivity changes may be deduced from cross-section plant data. The cross section provides the initial conditions concerning the technological mix before changes. A simple set of rules on innovation and diffusion, also suggested by the crosssection information, then yields the expected changes of the mix. The cross-section approach has many virtues. It is unconstrained by the existence and quality of historical series, and moreover a suitably designed sample also catches the peculiar characteristics of an industry at a particular time or in a particular region. The possibility of refinement is virtually unlimited. From a theoretical point of view the opportunity afforded for testing the behavior of individual plants is also invaluable. These merits are ranged against some equally conspicuous difficulties, the most important of which are probably the difficulties in introducing time variables and in interpreting the results.4 In this paper a simple method for ordering technologies is suggested. After a tag is attached to each technology indicating its place on the scale running from obsolete to advanced, a rule of technology diffusion is introduced. In the third section the rule is applied to each of the two-digit Census Standard Industrial Classification (SIC) manufacturing industries in New England. The results forecasts of productivity, inputs, and outputs are evaluated in the last section of this paper. Although it would be desirable to use the model to predict the known data of some past year, the information at hand has not permitted such an endeavor without gross assumptions. It will therefore be argued only that the long-range forecasts based on the present model are reasonable and consistent in view of historical and present conditions.

This article examines the suitability of variable costing for external reports. Variable costing is the inventory costing method which applies only variable production costs to product; under this method fixed factory overhead is not assigned to product. Typically variable production costs are direct material costs, direct labor costs, and variable overhead costs. Variable costing differs from conventional costing, sometimes called absorption costing, because fixed factory overhead is treated as a period cost rather than as a product cost. If a given cost has no influence on future operations, it is irrelevant and not helpful for decision-making. Therefore, assets should consist only of relevant costs, costs that will influence future results. If costs will not have an impact on future results, they have no service potential because they cannot affect future cost incurrence. Proponents of conventional costing maintain that income is greater when production exceeds sales than when production is at the same level as sales, because fixed facilities are better utilized and render more benefit in the form of inventories that will bring future revenue.

This article presents accounting problems which were prepared by the Board of Examiners of the American Institute of Certified Public Accountants and were presented as the second half of the C.P.A. examination in accounting practice on November 3, 1960. One of the questions asks to prepare a statement showing how cash will be distributed among partners by installments as it becomes available. In yet another question it asks to prepare a worksheet showing account balances per books, any adjustments one can consider necessary, and adjusted balances. Also, indicate which balance one would consider to be current, which balances noncurrent, and which balances would be shown in the stockholders' equity section of the balance sheet. The question further asks to prepare schedules of inventories, depreciation, and deferred taxes in good form. The Johnson Appliance Co. started business on January 1, 1950. Separate accounts were established for installment and cash sales, but no perpetual inventory record was maintained.