If you have only one product and sell to only one or two large customers, you don’t need much of a cost system to learn where you are making and losing money. But companies typically have hundreds of different products or product variations and hundreds or thousands of customers. In this situation, traditional cost systems will not accurately trace a company’s expense base to each product and customer, leading to a highly distorted view of the company’s economic model. Even a simple time-driven ABC model will fundamentally change the way the company manages its process improvements, its product variety, and its individual customer relationships.
Content: Quotation
Source: “Harvard Business School (HBS) Working Knowledge”
Subjects: Accounting, Finance
Source: “Harvard Business School (HBS) Working Knowledge”
Subjects: Accounting, Finance
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