Global Electronics Essay

3093 Words Dec 19th, 2007 13 Pages
INTRODUCTION The purpose of this case is to allow the reader to identify the behavioral variables that can determine the success of implementing an ABC system. There are several case studies that have been performed to examine technicalities in regards to ABC models and how profitability can be determined by the product, customer, or service. This case study focuses on how behavior can impact implementation because of the evidence that ABC has had high implementation failure rates and these failures have occurred mainly due to behavioral variables. We will discuss the background of Global Electronics, Inc. and their situation and then we will expand upon the signs that reveal that a costing system is not supporting management decision …show more content…
These activities consisted of defining activities, assigning resource costs to those activities, selecting activity drivers, determining driver quantities, and calculating ABC rates. The steering committee and the project team had the complete backing of the president, controller, and the executive committee. The short-term goal of the project was to develop product cost accuracy and create the best product mix quickly so as to improve the company’s poor financial performance. The long-term goal of the project was to progress to using Activity-Based Management (ABM). This meant that ABC cost data could be used to aid product engineers plan the cost impact of product design changes. In addition, the data could aid process engineers and operations managers identify and prioritize process cost-reduction opportunities. The project team decided to focus on calculating a complete “front to back” ABC cost for each product line, by implementing a worldwide “blitz” approach. The team felt that a pilot-study approach would be much too slow given the company’s poor outlook. ABC costs were calculated at the “front-end” fabrication facilities and these costs were linked by product line to the ABC costs calculated at the “back-end” assembly and test facility in Malaysia. The team also preferred an integrated approach to system’s integration rather than an offline approach where ABC data is kept separate from

Related Documents