Question: 1. What do you identify as the cost driver for the machine change-over costs? Do you agree with the Controller's ultimate classification of these costs

1. What do you identify as the cost driver for the machine change-over costs? Do you agree with the Controller's ultimate classification of these costs as product-sustaining? If not, how would you classify them in the cost hierarchy?

2. What non-financial issues should be considered when deciding whether to accept the order from Guess Who Jeans?

3. Derive the optimal production decision. How many units of, respectively, Stonewash and Proprietary Distressed jeans should the company make? First, argue purely based on (financial) profit data, and then factor in the non-financial issues you've identified in Question 2.

4. Discuss the reliability of activity-based costing to lead to the optimal (profit-maximizing) production decision.

5. Do you agree with the Controller's marginal cost analysis? Discuss the reliability of marginal costing to lead to the optimal (profit-maximizing) production decision.

The case is uploaded to Google Drive: https://drive.google.com/file/d/1ce0lii6kgAPmhwhssL_btN8skISMur_a/view?usp=drive_link

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