10 Pages Posted: 21 Oct 2008
The primary purpose of this case is to provide students with an opportunity to practice the implementation of a simple activity-based costing (ABC) system. In doing so, students are asked to review several possible allocation bases and ascertain the best base by which to allocate plant administration costs. In addition, students are expected to calculate and compare traditional volume-based or direct labor plus direct materials-based overhead allocation results with ABC and analyze which allocation method is most appropriate to the situation at Zauner Ornaments. This case also allows students to apply a managerial perspective and utilize the cost allocation results to identify potential pricing and cost management strategies.
Keywords: cost accounting, cost allocation, product costs
JEL Classification: M40, M46
Suggested Citation: Suggested Citation