ABSTRACT
The writer does not believe in the principle of charging into either cost of production or administrative expense interest on the capital invested in the business. Many concerns do so charge interest, and many reputable accountants and efficient engineers allow it; but it is hard to see the logic of their arguments in its favor. In the writer’s experience he has found that it is usually done for the purpose of increasing the cost for some reason, such as influencing the selling department in securing good prices for their goods, or for the purpose of concealing the real cost of the articles made; the manager of the sales department, knowing the real cost and making allowances where necessary at the time of sale.
