Steinway: Case Study

Paper Summary:

This paper suggests ways in which notable piano-maker, Steinway, could benefit from activity-based costing instead of traditional cost accounting methods.

From the Paper:

"In traditional cost accounting, all manufacturing costs are assigned to products while non-manufacturing costs, general administrative costs, sales and marketing costs etc., are grouped into overhead which are then allocated out to products based on either labor hours or machine hours. While this system is simple, it has inherent flaws, most significant of which include the inability to determine the true cost of producing and supporting a product. This inability in turn can lead to poor strategic decisions as some products that appear profitable by traditional cost accounting..."

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