Abstract The article discusses about various issues related to fixed and variable costs. In considering the problem of the adoption of uniform accounting principles, it would seem that not enough attention is given to the matter of interpretative reporting. Once the bookkeeping principles have been established, the matter of preparing statements is of the utmost importance. An unwritten law in accounting is that the statements should report exactly what is in the ledger accounts. Under commonly observed accounting principles the resulting statements are useful not so much for what is contained in the body of the statement as for what is contained in the footnotes. It is suggested that it might be well to repeal the above-mentioned law, and concentrate upon the preparation of reports that are suited to the individual needs of the persons to whom they are directed. The division of operating expenses into fixed and variable categories is suggested here only as one step toward making the income statement more useful, and it involves very little change from the statement form which is now being used in three out of five cases according to the quotation from Financial Statements.
Robert L. Dixon (Sat,) studied this question.