Seligram Incorporations (Electronic testing operations)

I.Description of the existing be carcassThe existing court ashes of ETO is real simple. ETO stands for a address subject matter which concerns the entire division. This cost center is divided in two cost components: harbor labour party and allocated buck. Direct labor cost for distributively type of corporation are traced considerlyly to the harvest-tides whereas burden is the solely one cost pool. The burden cost includes costs connect to each of the interrogation rooms, engineering costs and administrative costs. nark costs are divided by the sum of direct labor which allows us to calculate the burden consecrate. Indeed, according to the calculations, the burden rate is be to: (Total burden $ / Direct labor $) x 100 = ($4,713,982 / 3260,015) x 100 = cxlv%. The existing cost system squeeze out be represented by the following diagram: computer science of burden rate for the existing cost system:Burden rateTotal burden costs$4.713.982,0Total direct labor doll ars$3.260.015,0=4.713982,0/3.260.015,0*100=144,6% powerful rate =145%Why does the existing cost system fail?This system was based on the fact that direct costs and command processing overhead time are seed in the same similarity for all product testing. However, the three following reasons show that it is no longer the case. Firstly, out-of-pocket to the implementation of the vendor certification and the Just-in-time delivery, some products are already tested and do not need any however tests.

There are so not concerned by the allocation of costs and ETO will event a decrease number of tests. Then, the firm f aces outsourcing, that is to say a movement ! from direct towards to indirect cost. This juvenile trend leads to a decrease in direct costs and to an increase in indirect costs. Lastly, new components are requiring more and more postgraduate technology tests. They consume highly automated equipment and require diametric testing procedures compared to opposite products. ETO will need less and less... If you pauperization to get a full essay, order it on our website: OrderCustomPaper.com

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