Reviewed by Jackson F. Gillespie University of Delaware

The author’s main discussion is on the allocation of “shop charges,” i.e., overhead, to individual jobs. He relates the importance of this allocation, and presents in detail a “better” method of allocation.

Church divides the shop into “production centres,” defined as “a machine or a bench at which a hand craftsman works.” As much as possible, overhead is traced to these individual production centres, and then is allocated to jobs via a burden rate for each specific centre. The burden rate is based on full-time usage. If the machine is used at any point less than full-time, there are unallocated overhead costs. These unallocated costs are put into an account with the rest of the shop charges which could not be traced to specific production centres. At the end of each month, a supplementary rate is derived from this total and allocated to jobs.

An increase in the supplemental rate implies either slack time or inefficiency in the shop.

Church discusses how specific costs would fit into the allocation scheme. He also tells how the method could be used in mass pro-duction situations. Finally, allocation of “office and selling” expenses is examined briefly.

The author gives the reasoning behind each step taken in the development of the allocation technique. There is also a thought-provoking discussion of the pros and cons of overhead allocation based on labor hours, labor cost, or machine hours. However, there is no discussion of predetermined overhead rates. It is left to the reader to compare Church’s allocation with present-day allocation used in cost accounting texts. Such a comparison should give insight into the allocation of overhead.