1. Why did they need to present a new type of merchandise cost system? what is incorrect with the old and why is that a job? Siemens Electric Motor Works is one of the largest corporations that produce electrical merchandises. In order to diminish costs and be profitable in a competitory environment they needed a new solution by implementing a new scheme. The new scheme was to bring forth a lower volume of forte merchandises instead than the high volume of standard motors. Implementing a new scheme for forte motors made the company realized they could no longer utilize the old cost system for bing standard motors. That is due to the fact that the old system did non supply the right information to cipher the monetary value for the forte motors.
Another ground for altering the system is that the old one did non hold the capacity to capture the dealingss between the increased support costs and alterations within the merchandise mix. This all led to an addition in support costs. as costs in stuff and labour. Having a merchandise mix with customized orders will take to additions of costs due to the sum of stuff. labour. production and supported costs. Through the new system it is easier to place which orders would be most profitable which leads to a better decisionmaking which give the new system greater value. But utilizing the old system. they could non place productively orders ( har jag forstatt ratt? )
2. Describe and compare some costing issues ( of your ain free pick. but it shall be motivated though ) related to the usage of traditional costing theoretical accounts ( methods ) including older versions of ABC vs. more “modern” versions such as ulterior coevalss of ABC ( activity based bing ) or aim costing processs. The paper should include both a descriptive portion every bit good as an analytical ( problemizing ) of the methods and their application of your pick.
