Customers now demand a wide variety of “personalized” products and want those products delivered quickly. Factory automation is replacing the traditional labor-intensive production lines. Thus, product costs are determined when they are “on the drawing board” because, once they are designed, it is difficult to change the method of production or component materials of products.
a. Why is determining the cost to manufacture a product quite a different activity from determining how to control such costs?
b. Why has the advancement of technology made costs more difficult to control?
c. For many production costs, why should “number of units produced” not be considered a cost driver even though it is certainly a valid cost predictor?