Assigning Costs to
The two cost management systems that have been traditionally used to cost
products and services are job order costing and process costing. Many companies
still use these two systems. How
1-19 Case drawn from an episode reported in Analog Devices: The Half-Life
System Harvard Business School Case #9-190-061.
This production manager has expressed very clearly how he uses a mix of
financial and nonfinancial information for his task. He disda
Cost driver rate for the machine department:
$350,000/14,000 machine hrs = $25/machine hr
Cost driver rate for the finishing department:
$280,000/$350,000 = 80% of DL cost
Direct materials cost
Direct labor cost
3-35 Incremental revenue = 10,000 ($12-5) = $70,000
Incremental cost = $75,000
Since the incremental revenue is less than the incremental cost, the rework
should not be carried out.
NB: The purchased cost of the components, being a sunk cost, is
11-1 Financial control is the formal evaluation of some financial facet of an organization
or a responsibility center to assess organization and management performance.
Financial control uses financial numbers, such
Based on the information given, Donner is more profitable and
Carlson is unprofitable:
Cost of goods sold
7-30 Benefits from cellular manufacturing operations are estimated to be
$818,000 as shown below:
8-32 As shown below, Greysons new break-even time occurs during Quarter 3
of Year 4, approximately 15 months later than the initial 30 months (Year
3, Quarter 2).