Question: Cost System Redesign at a Medium-Sized Company, by David E. Stout, Ph.D., and Gregory P. Bedenis, CPIM, Management Accounting Quarterly (Summer 2007), Vol. 8, No.

Cost System Redesign at a Medium-Sized Company, by David E. Stout, Ph.D., and Gregory P. Bedenis, CPIM, Management Accounting Quarterly (Summer 2007), Vol. 8, No. 4 This article looks at a company that was experiencing unprofitable growth and weak cash-flow activity. The authors examine how an ABC method allowed the company to become more competitive, to look at their current product mix and product lines, and ultimately, to improve cash flow and product profitability.

Discussion Questions

1. Why for any manufacturer is proper inventory management important?

2. What are the elements of an ABC system?

3. What is a cost objective?

4. Why are duration drives used in an ABC system?

5. What internal factors limit the ABC models ability to influence the decision-making process in a company?

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