Siemens Electric Motor Works (A) (Abridged)

  • Reference: HBS-105S11

  • Year: 1988

  • Geographic Setting: Germany

  • Publication Date: Oct 9, 12

  • Fecha de edición: Feb 10, 1997

  • Source: HBSP (USA)

  • Type of Document: Case

  • Company: $400 million DM

  • Industry Setting: Electronic components;Manufacturing

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Description

Explores how a cost system can help support a firm's decision to change strategies. In the process, the students are introduced to a simple activity-based cost system. Siemens Electric Motor Works found itself facing an increasingly competitive environment and so made a decision to move from mass production of specialty motors to the production of small lots of custom motors. In doing so, they found their old cost system led them to poor decision making. By switching to a simple activity-based system, more accurate product costs were computed, facilitating better divisional performance.

Keywords

Activity-based costing Adoption Cost accounting Cost allocation Cost systems Costing Implementing strategy Management Production