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Cost Management System Being Applied in Various Scenarios

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For each of the decisions listed below, indicate the purpose of the Cost Management System being applied.

a. A production manager wants to know the cost of performing a setup for a production run in order to compare it to a target cost established as part of a process improvement program.

b. Top management wants to identify the profitability of several product lines to establish the optimum product mix.

c. Financial managers want to know the manufactured cost of inventory to appear on the balance sheet of the annual report.

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The solution discusses cost management system being applied in various scenarios.

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For each of the decisions listed below, indicate the purpose of the Cost Management System being applied.

a. A production manager wants to know the cost of performing a setup for a production run in order to compare it to a target cost established as part of a process improvement program.

A production manager wants to know cost of performing a set up, in such case, cost management system is used to inform clearly the direct material cost, direct labor cost and other overhead to be incurred for performing the set up for a production run as cost management system will have accurate and detailed information with respect to all components of costs of performing the set up for a production run and cost management system helps the production manager to compare the actual cost with the target cost ...

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