Tuesday 12 November 2019

Copper and Kaplan used the following example to illustrate the inability of traditional systems to report

Copper and Kaplan used the following example to illustrate the inability of traditional systems to report accurate product cost:
Consider two hypothetical plants turning out a simple product: ball-point pens. The factories are the same size and have the same capital equipment. Every year Plant I makes 1 million units of only one product: blue pens. Plant II, a full-time producer, also produces blue pens, but only 100,000 a year. Plant II also produces a variety of similar products: 80,000 black pens, 30,000 red pens, 5,000 green pens, 500 lavender pens, and so on. In a typical year Plant II produces up to 1,000 product variations, with volumes ranging between 100 and 100,000 units. Its aggregate annual output equals 1 million pens of Plant I.             

Contact Us For Tutoring:

Name

Email *

Message *