Product Costing in the Presence of Endogenous Subcost Functions

Posted: 13 Aug 1997

See all articles by John Christensen

John Christensen

University of Southern Denmark - Department of Accounting and Finance

Joel S. Demski

University of Florida - Fisher School of Accounting

Abstract

We study a multiproduct setting in which the underlying technology permits identification of economic subcost functions. We then explore the ability of various accounting procedures to produce relatively accurate marginal cost estimates. This ability varies with the underlying technology, as well as among the products. Moreover, a portfolio perspective emerges; with errors varying among the products the issue of where in product space to tolerate relatively large costing errors in order to help ensure relatively small costing errors in other products arises.

JEL Classification: M40, M46

Suggested Citation

Christensen, John A. and Demski, Joel S., Product Costing in the Presence of Endogenous Subcost Functions. Available at SSRN: https://ssrn.com/abstract=10616

John A. Christensen

University of Southern Denmark - Department of Accounting and Finance ( email )

Campusvej 55
Odense DK-5230
Denmark

Joel S. Demski

University of Florida - Fisher School of Accounting ( email )

Warrington College of Business
PO Box 117166
Gainesville, FL 32611-7166
United States
352-392-7597 (Phone)
352-378-1079 (Fax)

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