This paper investigates the relative performance of absorption versus direct costing procedures. Traditionally absorption costing procedures have been defended on the basis of them acting as a proxy for hard to measure opportunity costs. We question the validity of this traditional defence by...

Business organizations are faced with the financial and physical task of managing interrelated flows of material and cash. Material needs capital, and on the other hand, when finished goods are sold, they contribute to cash reserves. In this paper, we present and study a dynamic model in which...