Abstract The article presents the author's response to a commentary on input-output analysis for cost accounting, planning and control. The author relates that the commentary's writer talked of the cost allocation model when referring to the use of a system of linear equations to represent apportionment of costs among interacting departments. The author said that it is not clear to the commentary's writer how the term model can be applied in such case. He explains that it would seem that the linear system itself could be termed a model, independently of the use to which it is put.

J. Leslie Livingstone, Michael F. van Breda, Relationship between Accounting and the Internal Rate of Return Measures: A Reply, Journal of Accounting Research, Vol. 14, No. 1 (Spring, 1976), pp. 187-188

Abstract ABSTRACT: This article describes the repair-replacement process of a product under warranty as a stochastic process and develops a model to estimate the costs due to warranty. The product is assumed to be made up of several components for which failure rates are available. Markovian states are defined dependent on the number of failures of each component. A replacement policy is superimposed, and an approach to obtaining the transition probabilities is illustrated when the failures are solely due to chance. The use of the model to estimate the warranty costs during an accounting period, when there are warranties outstanding for the products sold during prior periods in addition to the products sold during the current period, is discussed.