The Importance of Idle Capacity Costs.

Abstract This article raises one of the top problems of present-day accounting; this is the purpose of the accountant's work. The question is whether the accountant will continue to operate within a system of his own design with little attention to the effects of the results attained; this reflects the widely held opinion that the accountant's job is to prepare statements and that it is up to those receiving the statements to interpret them in a manner suitable from their point of view. the other approach to the accountants work is to consider it as a vital part of the information system of the enterprise; then it is up to the accountant to integrate his specific system into the broader one and attempt to develop data which should be of greatest value to operating management in its task of making the best possible decisions. The author of this article apparently shares the first point of view. He pays no attention to managerial requirements but proposes a technique which, although consistent in itself, is bound to confuse rather than to clarify the essential issues. His model is interesting from a purely theoretical point of view in the sense that it emphasizes one particular approach to the problem. It was suggested earlier in this paper that there is nothing wrong with this type of model as long as it is used in the realm of theory only. But to apply it to the solution of practical situations without carefully considering the practical needs of management could he very harmful. There is an urgent need to reduce the gap between the task of accounting to serve managerial decision making and the somewhat narrow and self-centered attitude of many accounting practitioners who are in danger of losing sight of those really important tasks of the profession.