Abstract A sound knowledge of cost-volume-profit behavior and cost interrelationships is essential to many business decisions. Information which is easily understood but may not represent reality can lead to costly errors in judgment in business decisions. The management accountant certainly has a responsibility to provide management with something more than simply data. He has a responsibility to provide analyzed data, or useful information, for specific purposes. Yet he has a grave responsibility to avoid employing oversimplified techniques, or partial analysis, which may be misused or misunderstood by management. This article serves four purposes. First, to present the application and limitations of the Scatter Graph and Least Squares methods of studying the cost-volume-profit relationships of a company. Second, to present the possible weaknesses or limitations of Break-even Analysis and Profit Graphs. Third, to review some of the major statistical techniques of evaluating the significance of relationships. Fourth, to present the application of Multiple Regression Analysis, with the aid of a computer, to determine the cost-volume-profit relationship.

Abstract The article presents the application of the Monte Carlo method to inventory problems involving uncertainty of demand and or lead-time. A general statement defining the Monte Carlo technique would be that it is a process whereby data are generated by the use of some random number generator, such as a random number table. In essence, the Monte Carlo method consists of simulating the real world to determine some probabilistic property of a population of events by the use of random sampling applied to the various components of the events. All inventory situations have certain general characteristics, each involving some aspects of cost, service and usage. One characteristic is that as an inventory increases, the cost of storing those goods will also increase but the cost resulting from an inability to fill orders will decrease. Hence, one aspect of the inventory problem is to find an inventory level, which minimizes the sum of the expected holding and shortage costs. The objective of the article is to consider a set of decisions, which will minimize total cost and provide an acceptable level of goods to satisfy the anticipated or expected demand rate.

Abstract The article focuses on the definition of accounting. The author states that to the advanced accounting student or practicing accountant, the art of recording, classifying and summarizing business transactions conveys much more than simply the routine recording of business events in an accounting system, these activities would seem to be clearly in the realm of bookkeeping. Generally, an accounting system is designed to collect, classify and summarize business transactions, as well as business activities. An accounting system may be a manual system, a semi-mechanical system, or an electronic computer system. The study of the more recent developments in accounting systems, such as electronic systems, or computer systems, is especially interesting in regard to their potential in the area of analysis. Education for accounting must involve the study of all reasonable alternative systems, principles, standards and methods of measuring the effects of business activities. Accounting systems may be divided into two main types, financial accounting and administrative or managerial accounting.

Abstract Successful decisions are the hope of every manager. Snap decisions indicate a disregard for scientific thinking and reliance upon intuition and chance, or an unusual mental ability to simulate the problem, determine the strategic factors, and evaluate the alternatives. Historically, accounting has developed as the result of a specific need. The balance sheet model was presented to satisfy a need for financial information. Each ledger account is a model, or method, of measuring all transactions (the relevant factors) of a business which are relevant to the respective ledger account as it is specifically defined and by a method recognized as generally accepted by the accounting profession. To identify a specific ledger account as meaningful, the account must be defined in terms of the relevant business transactions which the model (ledger) will summarize, as well as the specific method or methods by which these relevant transactions will be measured. Finally, the specific ledger account must be defined as a relevant factor in the total accounting system, including its relationship to all other relevant factors of the system. Thus the accounting system itself, as we identify it, consists of a model summarizing the relationships of a large number of smaller models presumably for some specific purpose.

Abstract Accounting uses a universally known measuring stick, the dollar. Yet the common dollar is not an invariant measuring unit. Dollars in 1950 do not measure the same purchasing power as did 1940 dollars. Accounting, in other words, assumes a stable measuring unit. In periods of major price movements this assumption is clearly invalid for certain purposes, as has been pointed out by various writers in recent years. Undoubtedly interpretive accounting faces a challenge at this point. Management and accountants should remember that their primary responsibility is still to the investors, those who seem to be the forgotten men. The absentee investor, unlike the owner-operator, has no opportunity to combine reported information with first hand knowledge of the conditions and activities of the business. Management and accountants have the responsibility to provide information to aid the stockholder in wise decisions. The stockholder requires information to aid him in decisions to hold, sell or buy more stock, in other words, information concerning the comparative merits of his stock and alternative investment opportunities.

Abstract This article focuses on the problem of fixed charges in cost accounting. Fixed costs may be defined as those costs which remain practically unchanged in total amount when physical volume of output is varied. Such costs are not controllable by management, for their total amount is independent of circumstances which can be altered by executive decision. Most of these costs are fixed only within a certain range of output and become variable when greater ranges occur. To control costs, management needs information concerning controllable costs: which costs are controllable, what these costs should have been and what they actually were, as well as why the variances occurred. To determine the adequacy of selling prices, management needs to know total costs and product variable costs. Total costs will provide information as to the over-all adequacy of selling pikes. Variable product costs will provide information as to the adequacy of selling prices of individual products and, provide a guide for minimum selling prices. Thus management is concerned with both fixed and variable costs.