Problem:
SAC currently uses a basic standard cost system. Management knows very little about other concepts of costing and the benefits of having multiple costing methods.
Write a paper on Life Cycle Cost to include the following:
- the definition of the concept
- how and when the concept could be used by SAC
- how the application of the concept differs from the other concepts
- its advantages and disadvantages
Scenario:
The Sparklin Automotive Company (SAC) has been in business since 1930. It began business in the United States supplying spark plugs to automotive manufacturers (OEM, the original equipment market) and the automotive aftermarket.
SAC has introduced a new spark plug manufacturing process in the United States that produces a higher quality spark plug guaranteed to last 100,000 miles. The introduction of this spark plug has been very successful in the United States.
In addition to these types of projects, your responsibilities include creating and analyzing the monthly performance of each plant and consolidating the results into a set of financial statements footnoted with explanations.