Question
Cost Allocation for all cost categories in the value chain, different costs for different purposes Laser Tecnologia Srl develops, assembles and sells two product lines:
Cost Allocation for all cost categories in the value chain, different costs for different purposes
Laser Tecnologia Srl develops, assembles and sells two product lines:
- Product Line A (laser scanning systems)
- Product Line B (laser cutting tools).
Product Line A is sold exclusively to the Italian Department of Defence under a cost-plus reimbursement contract. Product Line B is sold to commercial organisations. Laser Tecnologia classifies costs in each of its six value-chain business functions into two cost pools: direct product-line costs (separately traced to Product Line A or B) and indirect productline costs. The indirect product-line costs are grouped into a single cost pool for each of the six functions of the value-chain cost structure:
Value-chain indirect product-line cost function 1 R&D 2 Product design 3Production 4 Marketing 5 Distribution 6 Customer service Base for allocating indirect costs to each product line Hours of R&D time identifiable with each product line Number of new products Hours of machine assembly time Number of salespeople Number of shipments Number of custom er visits Summary data in 2015 are
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