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December 9, 2016
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3 / 713
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Describe the existing cost system and calculate the cost of the 5 components in the case. What is wrong with the existing cost system?
The existing cost system measures direct labour and overhead. Overhead is grouped into a single cost pool that includes overhead costs associated with each of the testing rooms as well as the engineering overhead costs relating to software and tooling development and the administrative costs of the division...
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The lot sizes decreased and the number of lots increased.
In ETO's workload work shifted from simple inspection services to broader based tests. This was because the division was considerably cheaper in these complex tests than the other companies offering this service, for elementary testing however the division was much more expensive...
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