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A Proposed Mathematical Model For Allocating Energy Costs And Joint Costs In Industrial Facilities In Light Of Agency Theory, Hasan Zaki
Jerash for Research and Studies Journal مجلة جرش للبحوث والدراسات
Banker and Haghes (1994) demonstrated the economic sufficiency of normal activity - based unit cost for optimal pricing decisions. This paper provides an agency paralle to their analysis by examining how, in the presence of capacity cost, the desirable tradeoff between risk- sharing and incentives can be achieved through modification of the performance measures on which the contract is based. Similar to Banker and Hughes (1994), it was found in this study that the optimal capacity cost allocation is a function only of budgeted volume when capacity can be used to product a single product. Analysis of a joint production …