Seligram Inc

The three- angle-kitty system proposed by the hired consultant is the best make up business relationship solution for ETO.
The accuracy of make up information is overcritical to the success of any company. A good cost accounting method should provide both (1) the total product cost and (2) the unit cost of each product. In the case of ETO, it is requisite that the company is able to compute the cost per job or product. Up to the point of the companys study, ETO had only been focal point on the total product cost through the one-burden- pool rate. They were treating every job and every customer the same. Customers do non want to pay for unnecessary 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 consider the impact of new equipment and the add-on automation which results in the decline of school poke hours. imagine at the impact of the declining direct lug hours on ETOs current cost accounting method: In 1988, ETO had 60 direct labour personnel and 40 indirect labor personnel. Since 1983, the company had been experiencing a steady decline in direct labor hours and consequently the need to direct labor personnel.



The dislodge to more technical services was causing a berth in the labor mix. By the early 1990s, the company evaluate to see a crossover between the direct labor headcount and indirect labor headcount. The companys burden rate would increase from 145% to 228%. The one-burden-pool system would definitely pillowcase ETO to lose customers.
The two-burden-pool method begins to address the problem of declining direct labor; however, it combines the activities of the main testing path 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 double the rate of the...If you want to get a full essay, order it on our website: Ordercustompaper.com



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