CASE STUDY: HILTON MANUFACTURING COMPANY Harvard Business Review George Westin, a new general manager at Hilton Manufacturing Company uses information on cost behavior and a cost accounting system to help a less experienced president understand the nature of cost accounting, variable and fixed cost, the relevance or non-relevance of allocated costs and contribution margin. This classic case provides an excellent basis for students to understand the importance of product cost information in decision making. A second objective is to provide practice in considering whether or not assumptions about cost behavior are critical to decisions. A third objective introduces the concept of breakeven analysis, not by focusing on the point where no profit is earned but rather as a tool to consider whether or not one of two price points might be preferred. Finally, the last assignment question invites students to consider factors that lead to profitability.

QUESTION:

Why is it important that Hilton has an effective cost system?