>>
The method is particularly useful in helping to assign costs properly
when a company produces a range of different products (with batches of
varying sizes) on the same lines or machines. So, if Oly was making
small batches of OMs using conventional cost accounting and has
recently applied ABC, it is not unreasonable that they realized that
other products were subsidizing the production of OMs.
>>
Yeah, I'm familiar with this BUT... It is unlikely (for example) that OMs
are made on the same line as Styluses. Carl's point is valid. Is it better
to REDUCE the price of OMs so that Olympus can make bigger batches, or is
it better to INCREASE the price which will result in SMALLER batches?
As you suggest, SMALLER batches = higher cost per unit. LOWER selling
prices per unit = higher sales and lower cost per unit.
This has been borne out thru the history of industrial production, from
Model Ts thru VCRs.
Regards,
Denton Taylor
.......................................................
photogallery at www.dentontaylor.com
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