Costing & Pricing
Zauner Ornaments was a large manufacturer of crystal and glass products based in Vienna Austria. The company had an international reputation of producing high quality glass and crystal at affordable prices due to the skill of its master artisan and using innovative technology in the manufacturing process. Its product was used in fine restaurants, hotels and residencies around the world.
Due to slowing growth in the fine-crystal and glass-tableware markets, the organization has expanded into producing glass Christmas-tree ornaments to take advantage of its Crystal’s unique capabilities. The company leased a small manufacturing facility in Taiwan to produce small glass ball…show more content… We compared traditional volume based costing with outcome of ABC and following findings reported. Earlier Zauner was selling small glass ,large glass and specialty glass ball ornament at price of $9 ,$11 and $17 per box whereas price working out by allocating overhead cost using traditional volume based method coming to $21.12 ,$13.56 and $8.43 respectively . It is mentioning that management has not adopted accurate method of costing and correct base of pricing strategy. There is lot of price distortion if Zauner would have been made decision on volume based cost findings. It means that there are many issues with allocating overhead cost in various product lines. Here we have carried out ABC method and Findings are as tabulated below: Small glass ball