Seligram Inc Electronic Testing Operations Case Solution

Case ID: 189084
Solution ID: 2639

Words: 1387

Price: $75

Case Solution

Looks into the uselessness of a cost design when technology is modified. In specific, it questions students to raise cost center’s numbers and the distribution modes. The company transits from a one-center, direct labor hourly design to a system where costs are based on three-center, direct labor and machine-hours.

Excel Calculations

Calculating Burden Rate- Existing System

Caluating Buden Rates Pool wise- Account Manager's system

Caluating Buden Rates Pool wise- Consultant's system

Calculating New machine's costs

If the New machine is treated as separate cost centre

If the New machine is treated as part of the main room

Questions Covered

1.       What caused the existing system at ETO to fail?

2.       Calculate the reported costs of each of the five components under:

(a)    The existing system;
(b)   The system proposed by the accounting manager; and
(c)    The system proposed by the consultant.

3.       Which system is preferable? Why?

4.       Would you recommend any changes to the system you prefer? Why?

5.    Would you treat the new machine as a separate cost center or as part of the main test room? Why

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