Editor's Letter
By Kathy Williams

Activity-Based Costing and Predatory Pricing: The Case of the Petroleum Retail Industry
By Thomas L. Barton and John B. MacArthur
A lawsuit brought against a major chain of retail gasoline service centers in Florida alleged that the chain was engaged in predatory pricing--selling regular-grade gasoline below cost. The defendant tried to prove that the accusations were false, but the judge accepted the plaintiff’s analysis instead. Only when an expert witness used activity-based costing (ABC) to show the defendant was innocent did the judge find in favor of the retailer.

Activity-Based Costing for State and Local Governments
By Russell F. Briner, Ph.D., CMA, CPA; Mark Alford, Ph.D.; and Jo Anne Noble
ABC can be applied in the public sector to help state and local governments achieve a higher level of cost consciousness and control. In fact, the Texas Department of Agriculture is using it to determine which of its livestock inspection facilities is operating cost effectively. The authors offer examples from stations in Brownsville, Laredo, and Del Rio, Texas.

Improving Disclosure and Transparency in Nonprofit Accounting
By Gerald Aranoff, Ph.D., CPA
Nonprofit entities’ financial reporting is deficient in disclosure and transparency, the author asserts. He believes nonprofit accounting should require supplementary funds-format balance sheets and statements of changes in fund balances. To prove his points, the author provides a hypothetical case study with accompanying financial statements.

Stock Options Analyzed from Three Accounting Perspectives: Managerial, Financial, and Tax
By Katrina Mantzke, Ph.D., CPA, and B. Douglas Clinton, Ph.D., CPA
Compensatory stock options (CSO) are under fire yet are attractive to issuing companies. Here the authors describe how CSOs simultaneously align goals of three areas of corporate accounting--managerial, financial, and tax--and take a look at their negative effects and the array of solutions proposed to account for them.

Which Performance Measurement Is Best for Your Company?
By Terrance Jalbert, Ph.D., and Steven P. Landry, Ph.D., CMA, CFM, CPA
Here is an analysis and comparison of economic-value added (EVA), tracking stocks, and balanced scorecards as performance measurement systems. From these analyses, companies can determine which one fits their needs best.