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6 Cards in this Set
- Front
- Back
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Narnia
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three products
large overhead costs three competitors-each focuses on one product – Narnia‘s cost allocation is fine as long as only a total company profit figure is needed – But to find the optimal product mix, careful allocation of overhead costs to products becomes important |
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Giberson
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• Giberson is a skilled glassblower
• Works every day • Products are selling reasonably well • BUT: Business is on the verge of bankruptcy • Why? How can we safe the business? • Giberson needs to understand that he can produce whatever products he wants, without his total costs changing much • He does not need to be concerned about the cost of each individual product • Cost allocation not required to improve decision making • He needs to charge 70 cents per minute of his time and needs to be productive for 30 hours a week • He should spend as much time as possible as hot time and hire additional part time labor to do the 18 part-finishing |
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Seligram
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• ETO tests electronic components
• No direct material costs • Testing requires increasingly more expensive and less labor intensive equipment |
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Siemens
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– Siemens produces two types of motors
• Standard motors • Customized motors • There might be interdependencies between two seemingly independent markets • Try to figure out how competition in one market affects the game in another market • It might be worthwhile to voluntarily sacrifice business in one market, in order to protect business in another market |
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Anagene
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• Synopsis:
• Young biotechnology company • Produces equipment and cartridges that perform DNA analysis • Fluctuating margins confuse the board members and analysts Ask the following questions: • Do we have excess capacity? • Why do we have excess capacity? • Does it make economic sense to assign the cost of unused capacity to current products? • In the Anagene case the answer is no • Anagene is a start-up firm and bought the excess capacity for its future use • Current production is not the cause for excess capacity • Current customers should not pay for the investment 21 in excess capacity |
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Wilkerson
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– ABC
– The role of capacity – Action plan to improve profitability |
