John deere
...head costs .Also this was fairly accurate when there is not too much variation in the production volumes and they are producing to budgeted capacities However the weakness of the system is that it is conceptually flawed. All the activities of the production process are not considered when allocating the overhead. Hence the production costs can be erroneous. Also , in the existing system ,when the standard direct labour , direct machine hours etc are calculated , the volumes are based on long term volumes and hence creates problems when applied to short term production volumes The existing system failed because the company’s volumes were varying and not as budgeted. As mentioned earlier, the existing system cannot handle too much of variation in the production volumes. This results in inaccuracies in the f...