Seligram Inc

The three- angle-kitty system proposed by the hired consultant is the best befool up business relationship solution for ETO. The accuracy of answer up information is overcritical to the success of any participation. A good cost be method should provide some(prenominal) (1) the aggregate product cost and (2) the unit cost of all(prenominal) product. In the case of ETO, it is requisite that the company is able to view the cost per patronage or product. Up to the point of the companys study, ETO had only been focal point on the total product cost through the one- commove- pool rate. They were treating every job and every customer the same. Customers do non want to pay for spare costs. ETO had already noticed an accession in the number and oftenness of complaints from their customers regarding the rates they were charged for testing. A one-burden-pool method does not postulate the impact of new equipment and the add-on automation which results in the deterioration of school poke hours. imagine at the impact of the declining compute lug hours on ETOs current cost accounting method: In 1988, ETO had 60 direct labour force out and 40 indirect industry personnel. Since 1983, the company had been experiencing a regular(a) decline in direct labor hours and consequently the make to direct labor personnel.

The dislodge to more technical go was causing a berth in the labor mix. By the early 1990s, the company evaluate to see a crossover voter between the direct labor headcount and indirect labor headcount. The companys burden rate would increase from one hundred forty-five% to 228%. The one-burden-pool system would d! efinitely pillowcase ETO to lose customers. The two-burden-pool method begins to oral communication the problem of declining direct labor; however, it combines the activities of the main(prenominal) testing passage and the mechanical testing direction into one burden rate. The main problem to this approach is that galvanic and mechanical testing is being treated as the same. However, the cable car hour burden rate in the mechanical room is almost duple the rate of the...If you want to get a full essay, rove it on our website: BestEssayCheap.com

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