Reference no: EM131810318
"We have found our answer, activity-based costing it is," exclaimed Roger Lalonde, general manager of a multi-departmental medium-sized manufacturing company. Roger had recently attended a seminar which touted activity-based costing as the solution for all managerial problems.
However, controller Marie Walters was not too sure about the solution. She believed she had a developed a good system to allocate costs to individual departments to compute departmental income. She was nervous about Roger's strong attraction to activity-based costing.
"I wonder what he is thinking and where he wants to go with this new fad" she wondered and headed to Roger's office. Walters: Roger, I can see you are enthusiastic about this new activity-based costing. I think we must be cautious about implementing anything like that.
Lalonde: Why do you say that Marie? Isn't this right up your alley? I was going to come talk to you to lead the charge on this project.
Walters: I don't know if I am as enthusiastic as you are. Think about this, we have a nice system that our department managers understand.
Lalonde: They may understand but I am not so sure all the department managers are happy with the way indirect expenses are assigned to their departments. And you know that our indirect expenses are high.
Walters: I was not aware of that. I'll have to look into this.
Required
Assume the role of Marie Walters; what would you do? What advice would you give to Roger Lalonde?
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