At a Recent Professional Meeting, Two Controllers Discussed Product-Costing Problems

question 28

Essay

At a recent professional meeting, two controllers discussed product-costing problems in their respective companies. Both controllers are familiar with ABC systems, but neither of their firms utilizes such a system.
Controller D reported that part of the problem in his firm results from major differences among product lines with respect to unit volume, utilization of activities, quality assurance requirements established by customers, and product size. Controller M noted that in her company, which manufactures consumer goods, all items undergo the same basic production processes in the same sequence. Lately, however, there has been a significant increase in the number of item colors.
Both controllers are worried about the potential distortion of product costs under their traditional product-costing systems.
Required:
Which controller should be more concerned about the potential distortion? Explain.

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Definitions:

Visual Subsystems

Components of the visual system that process different aspects of vision, such as color, motion, and spatial orientation.

Binding Problem

The neurological challenge of explaining how disparate aspects of sensory information (such as color, shape, and location) are integrated into a unified perception.

Cohesive World

A perception or viewpoint in which elements of an environment or society are seen as interconnected and unified.

Serial Fashion

means performing tasks or processing information one step at a time, in a sequential order.