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Discussion of “On the allocation of fixed and variable costs from service departmentsâ€

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  • ANTHONY A. ATKINSON

Abstract

The Balachandran, Li and Magee (1987) (BLM) paper develops a positive purpose for cost allocations within the context of pricing the outputs of a central service facility. The line of argument is that, while the short†run price for a service should equal its short†run variable cost, there is a motivational purpose, relating to capacity acquisition, that can be served by allocating the fixed, or joint, costs of a service facility to its users. The authors establish some initial results and then, arguing that the issues considered in this paper relate to the more general problem of incentive compatibility, they compare their results to two extant models that deal with the topic of incentive compatibility.

Suggested Citation

  • Anthony A. Atkinson, 1987. "Discussion of “On the allocation of fixed and variable costs from service departmentsâ€," Contemporary Accounting Research, John Wiley & Sons, vol. 4(1), pages 186-193, September.
    • Handle: RePEc:wly:coacre:v:4:y:1987:i:1:p:186-193
    DOI: 10.1111/j.1911-3846.1987.tb00662.x
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    1. Bala V. Balachandran & Lode Li & Robert P. Magee, 1987. "On the allocation of fixed and variable costs from service departments," Contemporary Accounting Research, John Wiley & Sons, vol. 4(1), pages 164-185, September.
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