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Clearly, just going to more extensive materials and machine hour costing bases did not solve the problems that have been revealed by the bidding process for the John Deere purchased parts!
So, as discussed in class, the key "missing link" in an already solid cost accounting system is that JDCW's cost drivers are ALL UNIT-BASED, WHEREAS MANY OVERHEAD COSTS (as it turns out, 41 % (!) of the total overhead costs) ARE ACTUALLY INDEPENDENT OF UNITS OR VOLUMES (and thus, not "driven" by labor hours, machine hours, or material costs). In order to help some understand the importance of this "dis-connect" or "lack of synchronicity," let me give you the following "stylized" and simplified example, just for conceptual/pedagogical purposes:
Suppose CDE Corp makes two products: X1 and X2...
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