At a recent professional meeting, two controllers discussed product-costing problems in their respective companies.Both controllers are familiar with ABC systems, but neither of their ﬁrms utilizes such a system. Controller D reported that part of the problem in his ﬁrm results from major differences among product lines with respect to unit volume, utilization of activities, quality assurance requirements established by customers, and product size.Controller M noted that in her company, which manufactures consumer goods, all items undergo the same basic production processes in the same sequence.Lately, however, there has been a signiﬁcant increase in the number of item colors. Both controllers are worried about the potential distortion of product costs under their traditional product-costing systems. Required: Which controller should be more concerned about the potential distortion? Explain.

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The Answer of At a recent professional meeting, two controllers discussed product-costing problems in their respective companies.Both controllers are familiar with ABC systems, but neither of their ﬁrms utilizes such a system. Controller D reported that part of the problem in his ﬁrm results from major differences among product lines with respect to unit volume, utilization of activities, quality assurance requirements established by customers, and product size.Controller M noted that in her company, which manufactures consumer goods, all items undergo the same basic production processes in the same sequence.Lately, however, there has been a signiﬁcant increase in the number of item colors. Both controllers are worried about the potential distortion of product costs under their traditional product-costing systems. Required: Which controller should be more concerned about the potential distortion? Explain.

At a Recent Professional Meeting, Two Controllers Discussed Product-Costing Problems