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In lieu of this need a new account management system was devised.
Under the new cost system, two broad sources of costs were identified: manufacturing and SM&A. All costs within these categories were reclassified as either volume driven or order driven. Hence, four cost pools were set up.
The implementation of the new system had some limitations and challenges:
- The validity of the costing under the new cost system
- The market dynamics and how they would impact implementation
- Danger of losing customers for stocked items
- The applicability of the new system across borders
Moreover, the new cost system revealed that two large volume customers that were unprofitable...
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