The purpose of this article is to present a mathematically more accurate pattern of analysis of the cost structure of the industrial enterprise, with special reference to labor costs. It goes without saying that the analysis of the cost structure has to supply the basis for subsequent analyses, principally those of the break even complex, the forecast of unit costs, the profit, the effect of declining sales prices, increasing wages etc. If one identifies the combination of different cost classes, as they may be present in the isolated first shift, and then follows their changes at different volume levels, a definite pattern of formation of unit costs and profit will be observed. But, if one identifies the combination of costs after the addition of shift and overtime work, and then again follows their changes at different times and volume levels, a different pattern in the formation of unit costs and profit will be noted. Cost variability within a business and among businesses is endless. This situation, resistant to realistic survey, requires us to try to explore, and to define, on the basis of a purposeful classification, all distinct cases of cost structures which possibly could be encountered.

This article discusses the problem involved in allocating the various costs of manufacturing between the fixed and variable categories and to suggest a workable solution to this perplexing problem. This allocation is most commonly undertaken in connection with break-even analysis. Determination of fixed and variable expenses provides the basis for any type of cost-volume-profit analysis so it seems desirable to attack this problem first as a preliminary to any further study of such analysis. The allocation of manufacturing costs between the fixed and variable categories is often confused because, it is difficult to establish accounts which contain only one class of expense, that is fixed or variable. And secondly, many variable expenses do not maintain a constant relationship to the rate of operations. It is generally recognized that fixed costs are not truly fixed for all rates of activity or volume of production. They are fixed only for a given range of capacity and within a definite set of conditions. Yet, because of their nature and relationship to operations, they are identifiable and can be accounted for with accuracy. Consequently, their variability is predetermined to a high degree and is predictable, thus providing satisfactory data for analytical purposes.

This article discusses the nature and treatment of dividends under a entity concept of corporate residual equity. It was hypothesized that the main objective of the corporation after its inception is to survive, and that the corporation strives to maintain both economic and financial competence in implementing this objective. It was argued that the only significant representation made by the corporation in soliciting stockholders' capital contributions was its agreement to pay dividends when and if declared, and that capital thus contributed becomes the corporation's equity. It was advanced that the treatment of several persistent problems in corporation accounting might be rendered more consistent if the nature of corporate residual equity as thus analyzed were accepted. The corporation, in soliciting stockholders' capital contributions, agrees to pay dividends when and if declared. This suggests that both the timing and the amount of dividends are at the corporation's discretion, and that stockholders cannot force the corporation to pay dividends even though earnings are ample.