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Keystone Technologies: Testing and Packaging Operations

Published 25 Jan 2011
Reference 5716
Region Asia
Summary

The manager at Keystone’s computer memory testing operation in China faces a crisis –testing costs are “out-of-control” and internal customers are threatening to take their business elsewhere. An obsolete cost system is the real culprit and the management team proposes a quick fix. Will the fix be effective?

Teaching objectives

1. Demonstrate how internal cost allocations affect key business decisions. 2. Demonstrate how cost systems can become obsolete over time. 3. Illustrate the mechanics of calculating allocation rates and calculating costs. 4. Demonstrate how the number of cost centers determines cost system accuracy. 5. Provide a vehicle for discussing various cost system design issues.

Keywords
  • Cost systems
  • Indirect cost allocation
  • Cost system Design
  • Cost centers
  • Capacity costing
  • Cost drivers
  • Costs and decision making
  • RD0111
  • AR2011
  • AR1011
  • IAF 10/11
  • IAF 2520491