Overhead Allocation with Imperfect Markets and Nonlinear Technology.

Robert S. Kaplan; Ulf Peter Welam

doi:10.2308/tar-4514886

Overhead Allocation with Imperfect Markets and Nonlinear Technology.

Robert S. Kaplan¹; Ulf Peter Welam²

¹ Professor of Industrial Administration, Graduate School of Industrial Administration, Carnegie-Mellon University 1 · ² Assistant Professor of Operations Management, Boston University 2

The Accounting Review 1974

Abstract This article presents a study on the overhead allocation with imperfect markets and nonlinear technology in accounting in the U.S. The overhead costs generated by the traditional historical-cost-based accounting system are used for pricing usage of scarce resources. These costs must be below or at most equal to the marginal value of such resources as determined by the dual variables of the programming model. It is natural to object to the proposed method since we have a specific management decision model which generates valuations for scarce resources.

DOI: 10.2308/tar-4514886
Volume: 49 (3)
Pages: 477-484
Language: en
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