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By James L. Gibson, W. Warren Haynes

Accounting in Small enterprise Decisions provides the 1st large-scale empirical exam of the way small corporations use accounting information to make working judgements.

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2. Sell the evergreens at a reduced price and plant the land in the new crop. 3. s The solution would involve a comparison of three values: ( 1) the discounted contribution to overhead and profits of the five evergreens sold in the next season; ( 2) the revenue to be derived from a cut-price sale at the present (taking into account the effects of this price reduction on company sales in general) plus the discounted extra revenue to be gained from an earlier planting of the new item; and ( 3) the discounted extra revenue from an earlier planting of the new item less the incremental costs of plant destruction.

A recent article for nurserymen supports the view presented here: "The best thing for them [nurserymen] to do is make some guesses on what can be sold, plant these selections, do the best possible job of production, do all possible to keep expenses down, and when the crop is ready, do all within reason to sell it at the highest possible price .... A nurseryman is far better qualified to set prices if he is thoroughly acquainted with the year's ... production, market demands, carry-over, ... general business conditions and similar contingencies that joggle demands up and down.

The study led to the reduction of the crews to two men in July, August, September, January, and February. The same firm made a thorough study of the proportion of time its trucks were in use and determined that it would be economical to purchase an extra truck as a standby. " Very strangely, few of the managers interviewed had given formal attention to one of their most important costs from the economic point of view-the opportunity cost in growing one variety rather than alternatives. 4 If one wanted to measure the cost of a particular variety of plants, he should be concerned as to whether that variety takes three years or ten years to mature, since the longer period involves a greater cumulative sacrifice of revenue from alternatives.

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Accounting in Small Business Decisions by James L. Gibson, W. Warren Haynes


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