Article review - overhead can kill you
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Article review - overhead can kill you

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Short excerpt:

The article Overhead can kill you discusses a very interesting topic that affects the way managers determine the cost of a product. The topic of overheads is introduced in the article by providing an example of a company that made a production decision that did not consider the effects of overhead. Disregarding the effect of overheads led a bad decision that increased the firms losses from 9 million to 20 million. The reason the manager was not able to make the right decision was because the firm had been allocating depreciation and other fixed overheads on the basis of direct labor costs. Traditional cost accounting had completely distorted the picture and given rise to lousy decisions (Rao). Inefficient cost accounting systems are causing companies to not be able to determine if they

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