Actually it does work out that way, when you use activity based
costing (ABC). Traditional accounting methods tend to overestimate
the cost of production of large quantity items and underestimate the
cost of production of small quantity items, by charging some cost
components at a standard cost regardless of their actual cost. ABC is
a process whereby standard costs are replaced by actual costs.
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.
I'm not an accountant, but in my industrial consulting work I've
recommended ABC to help my clients understand when it makes sense to
outsource certain products instead of making them internally.
______________________________ Reply Separator _________________________________
Subject: Re: [OM] OLY PRICE INCREASES!
Author: olympus@xxxxxxxxxxxxxxx (Bpsterra) at INTERNET
Date: 3/6/1998 5:35 PM
Let me see if I understand this. The demand is low so they are raising prices?
Good! Now I can throw away that old economics textbook that has been taking up
valuable shelf space.
Carl May
############################################################
| This message was delivered via the Olympus Mailing List
| To receive the Digest version mailto:listserv@xxxxxxxxxxxxxxx
| with "subscribe olympus-digest" in the message body.
| To unsubscribe from the current list mailto:listserv@xxxxxxxxxxxxxxx
| with "unsubscribe olympus" in the body.
| For questions mailto:owner-olympus@xxxxxxxxxxxxxxx
| Web Page: http://Zuiko.sls.bc.ca/swright/olympuslist.html
############################################################
############################################################
| This message was delivered via the Olympus Mailing List
| To receive the Digest version mailto:listserv@xxxxxxxxxxxxxxx
| with "subscribe olympus-digest" in the message body.
| To unsubscribe from the current list mailto:listserv@xxxxxxxxxxxxxxx
| with "unsubscribe olympus" in the body.
| For questions mailto:owner-olympus@xxxxxxxxxxxxxxx
| Web Page: http://Zuiko.sls.bc.ca/swright/olympuslist.html
############################################################
|