Relevant Costs of Intermediate Goods and Services.

René P. Manès; Soong H. Park; Robert Jensen

doi:10.2308/tar-4487767

The Accounting Review Vol. 57 No. 3 1982

Relevant Costs of Intermediate Goods and Services.

René P. Manès¹; Soong H. Park²; Robert Jensen³

¹ Professor of Accountancy, University of Illinois at Urbana-Champaign. 1 · ² Assistant Professor of Accountancy, University of Illinois, Urbana-Champaign. 2 · ³ Distinguished Professor, Trinity University, San Antonio. 3

Abstract

This paper extends the Baker and Taylor approach to the reciprocal service cost problem by allowing for the existence of nonvariable costs. A sample problem is developed to show how a mixed integer programming approach can be used to account for nonvariable costs in make-or-buy decisions. Also, in order to better calculate the opportunity costs of not meeting demand because of service department bottlenecks, the Baker and Taylor model is converted into a profit maximization model and combined with the mixed integer approach.

DOI: 10.2308/tar-4487767
Volume: 57
Issue: 3
Pages: 594-606
Language: en
Sources: openalex crossref

Relevant Costs of Intermediate Goods and Services.

Abstract

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