ABSTRACT
The framework your Cost Concepts Committee used to state concepts relating to control is somewhat unconventional, and some background about our deliberations may help to explain why we finally decided on this framework. Initially, we attacked the problem by examining various types of cost constructions that are used for control purposes, in an attempt to find criteria for determining which of these was, in some sense, the “best.” We had lots of possibilities: actual costs, basis standard costs, normal capacity costs, current budgeted costs, ideal standard costs, short-run standard costs, direct costs, attainable costs, systems that prorated all overhead, systems that prorated no overhead, and many more. In the course of our long discussions, one committee member would explain and uphold a technique that he had seen used effectively in some company, and another member would counter with a description of a completely different system that he had observed being used with apparently equal effectiveness in another situation. Although we tried very hard to do so, however, we could find no objective way of generalizing on which type of cost system was “best” for control purposes.
