Abstract This article presents comments on an article describing a very useful algebraic teaching aid to explain the differences between the direct costing and full-absorption costing models, written by Don T. DeCoster and Kavasseri V. Ramanathan and published in the October 1973 issue of the journal "The Accounting Review." This assumption leads them to analyze a very special situation in which the overhead charged against profit under absorption costing is the volume variance rather than the more general situation in which the total overhead variance is charged against profit. it may be seen that the difference between the two income measures is the same as that developed by DeCoster and Ramanathan. The adjustment of the DeCoster and Ramanathan discussion for these two changes should be beneficial because students have frequently been introduced to budgets and variance analysis under full-absorption costing before variable costing is discussed.
John D. Bazley (Tue,) studied this question.