Including Differential Cost, Incremental Cost, Opportunity Cost, and Sunk Cost
Provided by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida
Relevant
Costing Main Page | Capital Budgeting Main Page
Albright, T. L. 2014. Over-land Trucking and Freight: Relevant costs for decision making. IMA Educational Case Journal 7(2): 1-6.
Arkes, H. R. and C. Blumer. 1985. The psychology of sunk cost. Organizational Behavior and Human Decision Processes 35(1): 124-140. (The paper describes how past investments of time and effort affect decision making).
Arora, A. and A. Nandkumar. 2011. Cash-out or flameout! Opportunity cost and entrepreneurial strategy: Theory, and evidence from the information security industry. Management Science (October): 1844-1860.
Arya, A., B. Mittendorf and D. Yoon. 2014. Revisiting the make-or-buy decision: Conveying information by outsourcing to rivals. The Accounting Review (January): 61-78.
Awasthi, V. N., C. W. Chow and P. D. Harrison. 1998. VIP company: A mini-case for reinforcing students understanding of sunk costs, ethics and the role of management controls. Journal of Accounting Education 16(3-4): 545-562.
Baker, D. D. 1995. Lease vs. buy: Avoid excess costs. Management Accounting (July): 38-39.
Balakrishnan, R., K. Sivaramakrishnan and S. Sunder. 2004. A resource granularity framework for estimating opportunity costs. Accounting Horizons (September): 197-206.
Banker, R. D., S. M. Datar and S. Kekre. 1988. Relevant costs, congestion and stochasticity in production environments. Journal of Accounting and Economics (July): 171-197.
Barton, T. L., W. G. Shenkir and B. C. Marinas. 1996. Instructional case: Main Line vs. Basinger: A case in relevant costs and incremental analysis. Issues in Accounting Education (Spring): 163-174.
Battista, G. L. and G. R. Crowingshield. 1964. Absorption, direct or relevant costing? N.A.A. Bulletin (August): 11-23 .
Becker, S. W., J. Ronen and G. H. Sorter. 1974. Opportunity costs - An experimental approach. Journal of Accounting Research (Autumn): 317-329.
Benke, R. L. Jr., J. D. Edwards and A. R. Wheelock. 1982. Applying an opportunity cost general rule for transfer pricing. Management Accounting (June): 43-51.
Bernhard, R. H. 1968. Some problems in applying mathematical programming to opportunity costing. Journal of Accounting Research (Spring): 143-148.
Billington, P. J. 1987. Classic economic production quantity model with setup cost as a function of capital expenditures. Decision Sciences (Winter): 25-42.
Boer, G. and J. O. Everett. 1976. Information science and relevant accounting reports. Management Accounting (April): 33-36, 39.
Brimson, J. A. 1987. Technology, sunk costs, and the make-or-buy decision. Journal of Cost Management (Fall): 52-55.
Bromwich, M. and C. Hong. 1999. Activity-based costing systems and incremental costs. Management Accounting Research (March): 39-60.
Burch, E. E. and W. R. Henry. 1974. Opportunity and incremental cost: Attempt to define in systems terms: A comment. The Accounting Review (January): 118-123.
Chasteen, L. G. 1972. A graphical approach to linear programming shadow prices. The Accounting Review (October): 819-823.
Chen, C. J. and M. Engquist. 1986. Primal simplex approach to pure processing networks. Management Science (December): 1582-1598.
Chenhall, R. and D. Morris. 1991. The effect of cognitive style and sponsorship bias on the treatment of opportunity costs in resource allocation decisions. Accounting, Organizations and Society 16(1): 27-46.
Christensen, C. M., S. P. Kaufman and W. C. Shih. 2008. Innovation killers: How financial tools destroy your capacity to do new things. Harvard Business Review (January): 98-105. (Discounted cash flow, the treatment of fixed and sunk costs, and over emphasis on earning per share).
Clarke, P. J. 1984. Optimal solution? Try the linear programming way. Accountancy (December): 119-120, 122.
Coan, N. A. 1951. Paradoxes in applying profit planning doctrines. N.A.C.A. Bulletin (June): 1179-1192. (Coan applies four techniques to a set of product cost data to show that a judgment based on a single technique can be erroneous. The techniques include: the conversion cost profit upcharge formula, the marginal balance or profit volume ratio, the profit per machine hour, and the percent gross or net profits by product).
Cooper, R. and R. S. Kaplan. 1991. Profit priorities from activity-based costing. Harvard Business Review (May-June): 130-135.
Coulthurst, N. and J. Piper. 1986. Terminology and conceptual basis of information for decision making. Management Accounting UK (May): 34-38.
Coulthurst, N. and J. Piper. 1986. Framework for analysis of decision-relevant costs and benefits. Management Accounting UK (June): 40-42.
Dillon, R. D. and J. F. Nash. 1978. The true relevance of relevant costs. The Accounting Review (January): 11-17.
Dionise, R. V. 1971. Differential cost concept: Applied to analysis of yield variances. Management Accounting (January): 36-38.
Dopuch, N. 1963. Mathematical programming and accounting approaches to incremental cost analysis. The Accounting Review (October): 745-753.
Drtina, R. E. 1994. The outsourcing decision. Management Accounting (March): 56-62.
Ferrara, W. L. 1963. Relevant costing - Two points of view. The Accounting Review (October): 719-722.
Ferrara, W. L. 1970. Relevant costing: Footnote to a controversy. Management Accounting (January): 45-47.
Fess, P. E. 1963. The relevant costing concept for income measurement - Can it be defended? The Accounting Review (October): 723-732.
Fessler, N. J. 2011. Dr. Livingroom, I presume. Issues in Accounting Education (November): 807-814. ("This case places students in the context of personal negotiations with a health care provider regarding the price of offered services. This short but rich case is intended to be administered and discussed in a single hour-and-fifteen-minute class session, and enables instruction and discussion on important accounting concepts such as relevance, opportunity cost, breakeven, pricing, and fairness-in a personal-services setting").
Friedman, L. A. and B. R. Neumann. 1980. The effects of opportunity costs on project investment decisions: A replication and extension. Journal of Accounting Research (Autumn): 407-419.
Gietzmann, M. B. and G. E. Monahan. 1996. Absorption versus direct costing: The relevance of opportunity costs in the management of congested stochastic production systems. Management Accounting Research (December): 409-429.
Gould, D. P. 1969. Opportunity accounting for product line decisions. Management Accounting (April): 33-38.
Graham, D. A. 1984. Cost-benefit analysis under uncertainty: Reply. American Economic Review (December): 1100-1102.
Grinnell, D. J. 1976. Product mix decisions: Direct costing vs. absorption costing. Management Accounting (August): 36-42, 53.
Groot, A. M. and A. M. Groot Jr. 1964. Economic order quantity - European practice. N.A.A. Bulletin (May): 27-32.
Hanley, E. J. 1945. Cost for special purposes. N.A.C.A. Bulletin (November 1): 171-177.
Harrison, P. and J. Shanteau. 1993. Do sunk cost effects generalize to cost accounting students? Advances in Management Accounting (2): 171-186.
Harvard Business Review. 1925. Case studies in business: Policy of a shoe manufacturer with regard to special orders. Harvard Business Review (April): 348-356.
Harvard Business Review. 1927. Case studies in business: Shall we buy this new machine? Harvard Business Review (October): 101-105.
Heard, E., C. Konstans and J. D. Edwards. 1974. Demonstrating the conceptual significance of the matrix inverse. The Accounting Review (April): 377-381.
Heath, F. L. 1949. The philosophy of conversion cost pricing. N.A.C.A. Bulletin (October): 137-142.
Hirsch, M. L. Jr. and M. C. Nibbelin. 1992. Incremental, separable, sunk and common costs in activity-based costing. Journal of Cost Management (Spring): 39-47.
Holstrum, G. L. and E. H. Sauls. 1973. The opportunity cost transfer price. Management Accounting (May): 29-33.
Hopson, J. F., D. R. Gibson, and S. M. Zimmerman. 1990. Simplifying the use of the economic order quantity formula to control inventory cost. Journal of Cost Management (Winter): 8-12.
Horngren, C. T. and G. H. Sorter. 1964. An evaluation of some criticisms of relevant costing. The Accounting Review (April): 417-420.
Hoskin, R. E. 1983. Opportunity cost and behavior. Journal of Accounting Research (Spring): 78-95.
Jaedicke, R. K. 1958. Some notes on product-combination decisions. The Accounting Review (October): 596-601.
Kanodia, C., R. Bushman and J. Dickhaut. 1989. Escalation errors and the sunk cost effect: An explanation based on reputation and information asymmetries. Journal of Accounting Research (Spring): 59-77.
Kee, R. 2004. Evaluating product mix and capital budgeting decisions with an activity-based costing system. Advances in Management Accounting (13): 77-98.
Kelly-Newton, L. 1980. A sociological investigation of the U.S.A. mandate for replacement cost disclosures. Accounting, Organizations and Society 5(3): 311-321.
Kennon, W. 1955. Product mix control by activity analysis. N.A.C.A. Bulletin (November): 319-334.
King, A. M. 1997. Three significant digits. Journal of Cost Management (Winter): 31-37.
Kornbluth, J. S. H. 1974. Accounting in multiple objective linear programming. The Accounting Review (April): 284-295.
Krone, L. H. Jr. 1964. A note on economic lot sizes for multi-purpose equipment. Management Science (April): 461-464.
Lea, R. B. 1972. A note on the definition of cost coefficients in a linear programming model. The Accounting Review (April): 346-350.
Leininger, W. E. 1977. Opportunity costs: Some definitions and examples. The Accounting Review (January): 248-251. (Summary.
Leitch, R. A., P. R. Philipoom and T. D. Fry. 2005. Opportunity costing decision heuristics for product acceptance decisions. Journal of Management Accounting Research (17): 95-117.
Mackey, J. T. 1983. Allocating opportunity costs. Management Accounting (March): 33-37.
Manes, R. P., S. H. Park and R. Jensen. 1982. Relevant costs of intermediate goods and services. The Accounting Review (July): 594-606.
May, P. A. 1955. Profit polygraph for product mix evaluations. N.A.C.A. Bulletin (November): 307-318.
McFarland, W. B. 1939. When is selling at a loss a profitable business policy? N.A.C.A. Bulletin (November 1): 328-339.
McFarland, W. B. 1947. Cost analysis for equipment replacement. The Accounting Review (January): 58-64.
McGregor, S. 2016. Costs for decision making: An instructional case of relevant costs and differential analysis of cost reduction alternatives. IMA Educational Case Journal 9(3): 1-10.
McRae, T. W. 1970. Opportunity and incremental cost: An attempt to define in systems terms. The Accounting Review (April): 315-321.
McRae, T. W. 1974. A further note on the definition of incremental and opportunity cost. The Accounting Review (January): 124-125.
Moyle, J. H. 1987. Justifying retrofit projects. Management Accounting (April): 59-61. (Determining the ROI on new projects after modifying existing capacity using the replacement cost and opportunity cost methods).
Neumann, B. R. and L. A. Friedman. 1978. Opportunity costs: Further evidence through an experimental replication. Journal of Accounting Research (Autumn): 400-410.
Nevins, E. R. 1934. Estimating the special order. N.A.C.A. Bulletin (December 15): 434-444.
Onsi, M. 1970. A transfer pricing system based on opportunity cost. The Accounting Review (July): 535-543.
Onsi, M. 1974. "Transfer pricing system based on opportunity costs": A reply. The Accounting Review (January): 129-131.
Oser, J. 1963. The Evolution of Economic Thought. Chapter 13: The Marginalist School. Harcourt, Brace & World, Inc. See Wieser.(Summary).
Ozdemir-Akyildirim, O., M. Denizel and M. Ferguson. 2014. Allocation of returned products among different recovery options through an opportunity cost-based dynamic approach. Decision Sciences 45(6): 1083-1116.
Paris, M. and D. Brassard. 2004. Reading between the numbers. Strategic Finance (December): 40-45. (Problems with outsourcing).
Park, H. G. and B. P. Hartman. 1987. An application of opportunity cost for a short-run pricing decision. Journal of Accounting Education 5(2): 307-313.
Perkins, D. 2004. Incorporating the opportunity cost of setups into production-related decisions. Management Accounting Quarterly (Fall): 15-20.
Perkins, D, J. Stewart and S. Stovall. 2002. Using Excel, TOC, and ABC to solve product mix decisions with more than one constraint. Management Accounting Quarterly (Spring): 1-10. All of the articles in this issue start on page 1.
Piturro, M. 2001. Christine Kirk: Helping companies make the outsourcing leap. Strategic Finance (February): 40- 44.
Ray, D. D. and W. W. Menke. 1970. Benefit-cost analysis: A challenge for accountants. Management Accounting (August): 7-14.
Reinstein, A. and A. Chandra. 2023. A decision support framework to address sunk cost bias. Cost Management (January/February): 35-42.
Reinstein, A., M. E. Bayou, P. F. Williams and M. M. Grayson. 2017. Resolving the sunk cost conflict. Advances in Management Accounting (28): 123-154.
Resh, M. and P. Naor. 1963. An inventory problem with discrete time review and replenishment by batches of fixed size. Management Science (October): 109-118.
Rhoads, S. E. 1985. Kind hearts and opportunity costs. Across the Board (December): 40-47.
Rinehard, J. R. 1970. Economic purchase quantity calculations. Management Accounting (September): 18-20.
Roberts, O. W. 1953. Opportunity costs in personnel administration. N.A.C.A. Bulletin (August): 1599-1608.
Roodhooft, F. and L. Warlop. 1999. On the role of sunk costs and asset specificity in outsourcing decisions: A research note. Accounting, Organizations and Society 24(4): 363-369.
Rorem, C. R. 1928. Differential costs. The Accounting Review (December): 333-341.
Saliers, E. A. 1943. Differential costs. The Accounting Review (October): 338-340.
Samuels, J. M. 1965. Opportunity costing: An application of mathematical programming. Journal of Accounting Research (Autumn): 182-191.
Sanders, T. H. 1929. The uses of differential costs. The Accounting Review (March): 9-15.
Sassone, P. G. and W. A. Schaffer. 1978. Cost-Benefit Analysis: A Handbook. Academic Press.
Sauber, R. 1952. Handling occasional custom work free of fixed burden. N.A.C.A. Bulletin (November): 401-406.
Schweikart, J. A. 1986. The relevance of managerial accounting information: A multinational analysis. Accounting, Organizations and Society 11(6): 541-554.
Singhania, M. and A. Jaitly. 2016. Project Tiger: Cost-benefit analysis. Cost Management (July/August): 14-23. (An initiative by India's government to save the nation's tigers).
Skinner, R. C. 1994. Beware an accounting confidence trick. Management Accounting (June): 48-49. (Related to the story of Joe and his rack of peanuts that appears in many editions of Horngren's Cost Accounting textbook).
Smith, K. J. 1988. Differential cost analysis techniques in occupational health promotion evaluation. Accounting Horizons (June): 58-66.
Solomons, D. 1966. Economic and accounting concepts of cost and value. In Backer, M. ed. 1966. Modern Accounting Theory. Prentice-Hall Inc. Chapter 6: 117-140. (Summary).
Sorter, G. H. and C. T. Horngren. 1962. Asset recognition and economic attributes - The relevant costing approach. The Accounting Review (July): 391-399.
Stambaugh, D. M. 1974. Imputed opportunity costs. Management Accounting (December): 39-40.
Staubus, G. J., G. H. Sorter, C. T. Horngren. 1963. Direct, relevant or absorption costing? The Accounting Review (January): 64-74.
Staw, B. M. and H. Hoang. 1995. Sunk costs in the NBA: Why draft order affects playing time and survival in professional basketball. Administrative Science Quarterly 40(3): 474-494.
Stuebs, M., C. Edison and K. Hurt. 2014. Sunk costs: What costs do you sea? IMA Educational Case Journal 7(3): 1-7.
Talwar, A. K. 1974. "Transfer pricing system based on opportunity costs": A comment. The Accounting Review (January): 126-128.
Trueman, R. E. 1972. Tutorial note: Opportunity loss concepts and incremental analysis. Decision Sciences 3(1): 136-137.
Vera-Munoz, S. C. 1998. The effects of accounting knowledge and context on the omission of opportunity costs in resource allocation decisions. The Accounting Review (January): 47-72.
Victoravich, L. M. 2010. When do opportunity costs count? The impact of vagueness, project completion stage, and management accounting experience. Behavioral Research In Accounting 22(1): 85-108.
Volk, C. H. 2013. An opportunity cost primer. Strategic Finance (April): 46-51.
Walker, G. and D. Weber. 1984. A transaction cost approach to make-or-buy decisions. Administrative Science Quarterly 29(3): 373-391.
Walker, G. and D. Weber. 1984. Errata: A transaction cost approach to make-or-buy decisions. Administrative Science Quarterly 29(4): 627.
Weeks, T. G. 1963. A guide to quantity purchasing decisions. N.A.A. Bulletin (September): 43-50.
Weiss, P. B. 2003. Buy or lease? Strategic Finance (November): 52-57.
Widener, S. K. and F. H. Selto. 1999. Management control systems and boundaries of the firm: Why do firms outsource internal auditing activities? Journal of Management Accounting Research (11): 45-73.
Williamson, J. E. and W. R. Sherrard. 2002. Solving the production lot size problem when using ABC in an MRP II environment. Management Accounting Quarterly (Spring): 1-5.