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File Size: 204 KB
Digital: 8 pages
Publisher: Harvard Business Review January 5, 2008
Product Description
Five years ago, Hewlett-Packard's Roseville Networks Division cost accounting system was obsolete and didn't reflect the true cost of a product. Management decided to redesign the system around the things that truly drive costs. Some decisions to be made were: Which costs should be traced directly to products? What should the categories of indirect costs be? What are important activities within those categories? What drives the costs of those activities? The system was introduced in 1985 and has been revised ever since. The division has stopped tracking direct labor to products and is considering ways to make the system more sensitive to volume in manufacturing and procurement.
Download Description
Five years ago, Hewlett-Packard's Roseville Networks Division cost accounting system was obsolete and didn't reflect the true cost of a product. Management decided to redesign the system around the things that truly drive costs. Some decisions to be made were: Which costs should be traced directly to products? What should the categories of indirect costs be? What are important activities within those categories? What drives the costs of those activities? The system was introduced in 1985 and has been revised ever since. The division has stopped tracking direct labor to products and is considering ways to make the system more sensitive to volume in manufacturing and procurement.
