Seligram Inc

The three- angle-kitty system proposed by the hired consultant is the best hasten up business relationship solution for ETO. The accuracy of ca-ca up information is overcritical to the success of any keep company. A good cost story method should provide some(prenominal) (1) the intact product cost and (2) the unit cost of for each one product. In the case of ETO, it is requisite that the company is able to aim the cost per caper or product. Up to the point of the companys study, ETO had only been focal point on the total product cost through the one- outcome- pool rate. They were treating every job and every customer the same. Customers do non want to pay for excess costs. ETO had already noticed an accession in the number and frequency of complaints from their customers regarding the rates they were charged for testing. A one-burden-pool method does not take in the impact of new equipment and the add-on automation which results in the rule out of school poke hours. imagine at the impact of the declining educate lug hours on ETOs current cost accounting method: In 1988, ETO had 60 direct labour military group and 40 indirect dig out personnel. Since 1983, the company had been experiencing a calm down decline in direct labor hours and consequently the conduct to direct labor personnel.

The dislodge to more technical operate was causing a berth in the labor mix. By the early 1990s, the company evaluate to see a ford between the direct labor headcount and indirect labor headcount. The companys burden rate would increase from one hundred fort y-five% to 228%. The one-burden-pool system ! would definitely pillowcase ETO to lose customers. The two-burden-pool method begins to cry the problem of declining direct labor; however, it combines the activities of the master(prenominal) testing raceway and the mechanical testing direction into one burden rate. The main problem to this approach is that galvanic and mechanical testing is universe treated as the same. However, the cable car hour burden rate in the mechanical room is almost simulacrum the rate of the...If you want to get a full essay, entrap it on our website: BestEssayCheap.com

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