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By | November 2012
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Frank, W. G. 1990. Back to the future: A retrospective view of J. Maurice Clark's Studies In The Economics of Overhead Costs. Journal of Management Accounting Research (2): 155-166.

Summary by Jodi Corcoran
Master of Accountancy Program
University of South Florida, Fall 2004

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Frank views Clark 's book, "The Economics of Overhead Costs" as an “accounting classic." Frank writes this retrospective view to show how contemporary accounting issues today mirror that of the past, specifically the search for relevance. Frank highlights the parallels between Clark 's insightful writings and the writings of M. Edgar Barrett, G. Benston, Sidney Davidson, and Robert Kaplan.

Basic Cost Concepts from J. Maurice Clark
Clarks ’ Concept of Overhead Costs

According to Frank, Clark notes the lack of proportionate variability of overhead with output and acknowledges that overhead must be treated differently than direct variable costs.

Different Cost Concepts

Frank lists Clark’s nine different decisions (Clark , chapter 9) for which Clark suggests accumulating different costs or measurements in order to find equitable solutions. Clark further suggests that different individuals may be better suited to make different decisions.

Frank compares Clark’s catalog of cost concepts to the first chapters of most modern texts. Clark distinguishes between cost concepts still very controversial today. Variable and Constant (or fixed ) Costs

Frank points out Clark’s understanding of cost variability. Again, Frank parallels Clark’s work to modern texts. Not only does Clark discuss two ways to estimate fixed and variable costs, but he also warns of the limitations of each. One such limitation mentioned is the difficulty in categorizing costs as fixed versus variable. Clark recognized most variable costs are not exactly proportionate to an...