The controller of a manufacturing company used a number of measures to provide managers information about the performance of its manufacturing operation. Three measures used by the company are:
● Scrap Index: The sales dollar value of scrap for the period.
● Orders Past Due: Sales dollar value of orders that were scheduled for shipment, but were not shipped during the period.
● Buyer’s Misery Index: Number of different customers that have orders that are late (scheduled for shipment, but not shipped).
1. Why do you think the scrap index is measured at sales dollar value, rather than at cost?
2. How is the “orders past due” measure different from the “buyer’s misery index,” or are the two measures just measuring the same thing?