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Unformatted text preview: with its pricing policies. In LI’s case, as discussed previously, the final cost object probably is a job, since this
is how most customers think about LI’s work. However, senior management also will be interested in the cost per
hour—which would be its intermediate cost object.
The Importance of the Cost Center Choice
Lawncare, Inc.’s cost per hour depends to a great extent upon senior management’s choice of cost centers. As
a result, this choice is an extremely important one.
Problem: LI currently bills its customers on the basis of number of hours spent on a job. How would its hourly rate differ between the
one-cost-center and multi-cost-center approaches? (Recall that 11,772 hours were spent in Mowing and 3,853 hours in Specia...
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This document was uploaded on 03/30/2014.
- Spring '14