Essay on Global Electronics

2247 WordsJul 15, 20139 Pages
Global Electronics Inc. Case Analysis Background Global Electronics, Inc. (GEI), has its main office in Sarasota, Florida and the company employs about 2,300 people at its three U.S. fabrication facilities (located in Huntsville, Alabama; Evansville, Indiana; and Reading, Pennsylvania), and has 4,000 employees at its assembly and test facility in Kuala Lumpur, Malaysia. Discrete power semiconductors and analog, digital, mixed-signal, and radiation-hardened integrated circuits for signal processing and power-control applications are at the heart of what GEI designs, manufactures, and markets. This case will examine the warning signs that existed within GEI to implement ABC as a possible solution and why ABC is a better solution when…show more content…
12). Objectives of the ABC cost system that the standard cost system did not cover was “to improve product cost accuracy and optimize the product mix as quickly as possible in order to help improve GEIs unsatisfactory financial performance. The long-term objective was to evolve toward the practice of Activity-Based Management (ABM). More specifically, GEI anticipated that the ABC data could be used to help its product engineers project the cost impact of product design changes, and to help its process engineers and operations managers identify and prioritize process cost-reduction opportunities” (Brewer et al., 2003, para. 13). ABC costing systems offered a better solution for GEI because, “GEI created its own customized ABC software called ACCURATE to capture the data inputs, interface with the standard cost subsystem, and calculate product costs” (Brewer et al., 2003, para. 20). After the ABC system was implemented, “There was a strong consensus across the plants that the ABC system resulted in both improved product-cost accuracy and greater product-cost visibility relative to the direct labor-based system. In spite of the lack of training, nonaccounting personnel intuitively believed that ABC captured the economics of the business better than the labor-based system. At a strategic level, this contributed to better marketing and product-mix decisions, and at the plant level, ABC improved relations with GEI
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