search query: @indexterm OPPORTUNITY COSTS / total: 47
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| Author: | Gietzmann, M. B. Monahan, G. E. |
| Title: | Absorption versus direct costing : the relevance of opportunity costs in the management of congested stochastic production systems |
| Journal: | Management Accounting Research
1996 : DEC, VOL. 7:4, p. 409-429 |
| Index terms: | ABSORPTION COSTS DIRECT COSTING OPPORTUNITY COSTS STOCHASTIC PROCESSES |
| Language: | eng |
| Abstract: | This paper investigates the relative performance of absorption versus direct costing procedures. Traditionally, absorption costing procedures have been defended on the basis of them acting as a proxy for hard to measure opportunity costs. We question the validity of this traditional defence by explicitly considering the extent to which absorption costing-based accounting calculations actually provide good proxies. The analysis shows that in some situations absorption costing so over estimates opportunity costs that it would be preferable to use direct costing even though this implicitly assumes opportunity costs are zero. |
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