Many accountants seem to have accepted the existence of a 'reality gap' between management accounting's conventional wisdom based on the neoclassical economic theory of the firm and actual business practice. Whilst the former recommends the use of a decision relevant cost approach to pricing...

Economists regularly decry the persistence with which firms set prices above marginal cost and thus, according to the economists, fail to maximize profits. But it is the economists who have it wrong - first, because variable accounting costs are not always a good proxy for marginal economic...

The epilogue to Supply Chain Partners: Virginia Mason and Owens & Minor (A), the B case details the outcome of the issues discussed in Case A; namely that Virginia Mason and Owens & Minor did implement the TSCC contract. Virginia Mason also kept the suture contract with O&M because the TSCC model...

Virginia Mason Medical Center (VM) hired Owens & Minor (O&M) as its alpha vendor for medical/surgical supplies in 2004. By 2005, O&M was performing JIT and LUM services for VM, but they believed the pricing model in the industry was outdated. VM and O&M partnered to create the Total Supply Chain...

Full cost data are irrational for planning and pricing decisions from a microeconomic perspective, but surveys consistently indicate that managers prefer to use full cost data to make pricing decisions. This paper presents a model, called step-ABC, that supplies full cost data but makes users...

This paper studies a periodic-review pricing and inventory control problem for a retailer, which faces stochastic price-sensitive demand, under quite general modeling assumptions. Any unsatisfied demand is lost, and any leftover inventory at the end of the finite selling horizon has a salvage...

We investigate cost-based access pricing in regulated network industries. Building on recent progress in the accounting literature, we show that a regulator must choose a particular depreciation schedule, namely, relative replacement cost depreciation in order to prevent the network provider...

Although neoclassical economic theory predicts that fixed cost magnitude and fixed cost reporting format will not influence short-term pricing decisions, these factors systematically affected pricing decisions in a duopoly experiment. Increasing fixed cost magnitude (a pure sunk cost in this...

Although neoclassical economic theory predicts that fixed cost magnitude and fixed cost reporting format will not influence short-term pricing decisions, these factors systematically affected pricing decisions in a duopoly experiment. Increasing fixed cost magnitude (a pure sunk cost in this...

We consider accounting from an evolutionary perspective. Accounting encompasses the creation of transactional records, the summarization of records in t-accounts, and the preparation of audited financial statements. Accounting's history spans at least 10,000 years dating back to the first human...