Keys, David E.
B.S. (Bachelor of Science)
Department of Accountancy
Increased foreign competition, automation, and deregulation have caused American companies to question the efficiency of their cost accounting systems. The Cost accounting topic receiving the most attention is allocation of overhead to products. This paper and case analysis examine several methods of improving the accuracy of overhead allocation. First, the effect of changing the number of cost centers from 1 to 2 and then to 31 was examined. Second, the effect of using "activity" overhead bases rather than direct labor hours was investigated. Third, the assignment of costs to various cost centers was studied. In all three cases, the use of sophisticated cost allocation procedures resulted in substantially different product costs. If companies continue to use the outdated, traditional techniques, they risk discontinuing production of profitable products and selling new products that are unprofitable.
LeFevre, Robert J. Jr., "Mayers Tap, Inc. Designing a Cost System" (1988). Honors Capstones. 776.
Northern Illinois University
Rights Statement 2
NIU theses are protected by copyright. They may be viewed from Huskie Commons for any purpose, but reproduction or distribution in any format is prohibited without the written permission of the authors.