Abstract Direct costing has become one of the most prominent current issues in the continuing discussion that surrounds the evolution of accounting theory and practice. Hence, it is appropriate at this time to review some of the arguments for and against the concept and to attempt to identify the principal issues in the controversy. The purpose of the author in this article is to examine these issues critically and dispassionately. This presentation is in the nature of an interim report, with primary attention focused upon the development and present status of direct costing but with some consideration of the prospects for the future also. Author's objective is to crystallize issues. It is possible that, given the present status of the accountant's art, they are irresolvable. The discussion in this paper will be confined to the implications of direct costing in external reports. There are two reasons for this. First, as indicated, it is in external reporting that the real controversy lies today. Second, the basic criterion guiding the selection of internal reporting practices is utility to management.
James M. Fremgen (Wed,) studied this question.