Electronic Testing Operations Seligram, Inc. April 28, Seligram, Inc.
How to Write a Summary of an Article? We will write a custom essay sample on Seligram Inc. The three-burden-pool system reports the cost: The accounting manager treats the machine hours as separate cost pool because the automated operation process leads to large percentage of total cost comparing to direct labor.
Measuring the machine hour costs can help us to assess the total burden more accurate. However, given the same machine hours, the different hours spend in main room and mechanical room also incurs different costs. We can see from Exhibit 5 that mechanical room has higher unit cost per hour.
Therefore, the three-cost-pool system can trace the costs back to the actual operation factors more clearly. Q1 According to the two explanations shown above, the critical problem that causes ETO to fail is the single cost pool accounting system.
In the single cost pool system, all products consume direct labor and overhead in the same proportion. However, some products need more direct labors while others require automated machinery operation.
And the trends of direct labor obsolescence also biased the calculation of burden rate, which causes the verall product cost assessment become misleading. Managerial Accounting Case Study 2: Both the accounting manager and consultant regard the administrative and technical functions as the same cost factor.
However, we think the technical support is very different in nature comparing with administrative cost. Each type electrical component which sent to ETO varies greatly in its complexity. For example, a keyboard IC is much simpler then a 3D graphic processing IC and requires less or nearly no technical support since keyboard IC is a matured product.
If we classify the technical functions in the same cost pool as administration costs, then a keyboard IC and a 3D graphic processing IC share the same direct labor burden rate, which is not reasonable. Therefore we recommend a four-cost-pool system that separate technical support from general direct labor burden.
Q5 From the data provided in Exhibit 5 and Exhibit 7, we can calculate the main test room burden rate if the new machine is included.Related Documents: Seligram, Inc.: Electronic Testing Operations Case Analysis Essay Case Analysis on Apple Inc Essay marketplace is founded on a philosophy that derives its insight at the intersection of technology and consumer values.
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William Shakespeare La Vida de Roberto Clemente This is a biography of Roberto Clemente. At the beginning, the Electronic Testing Operations (ETO) measured two components of cost: direct labor and burden, but the burden is grouped into a single cost pool that includes all costs and divided by direct labor dollars to obtain the burden rate.
We will write a custom essay sample on Seligram Inc. Case Analysis specifically for you. Seligram, Inc.
Electronic Testing Operations Essay example Words | 11 Pages Rev. April 28, Seligram, Inc.: Electronic Testing Operations tC We put in a piece of automated equipment a year ago that only fits the requirements of one customer.
Related Documents: Seligram, Inc.: Electronic Testing Operations Case Analysis Essay Case Analysis on Apple Inc Essay marketplace is founded on a philosophy that derives its insight at the intersection of technology and consumer values. Electronic Testing Operations (ETO), a division of Seligram, Inc., provided centralized electronic components throughout the s.
This centralization was estimated to save Seligram over $20 million in testing equipment investment over the next five years.