【正文】 lectrical devices and their main product lines were Motors and Motor Parts、 Breakers、 and Control Parts. Company Y sold its products in the domestic market as well as abroad. A portion of the pany’s output was sold directly to endusers, while the remainder was sold with the help of independent distributors. The management of Company Y was interested in using the Integrated ABCEVA System for the purpose of cost control and profit planning. 3 Comparison of the costing systems During the field study, three costing systems (TCA, ABC and the Integrated ABCEVA System) were used to obtain cost information for each pany in order to 5 identify factors which may lead to distortions through arbitrary allocation of capital costs. In a parison, capital costs were only able to be traced by the Integrated ABCEVA System. The nature of the TCA and ABC systems resulted in arbitrary allocations of capital costs. 4 RESULTS The main objective of the data analysis presented in this section is to investigate which factors most often distort information provided by the ABC system. As mentioned in the methodology section, factors such as diversity in production volume、 product size、 product plexity、 material consumption, and setups often distort cost information. These factors are examined closely for possible allocation errors. Data Analysis for Company X The data analysis for Company X began with an examination of its cost structure. Company X’s overall costs for 1998 were evaluated by paring the percentages of direct costs (direct labor and direct material)、 operating costs (overhead) and capital costs as shown in Exhibit 1. Exhibit 1. Cost Analysis for Company X in Thousands of Dollars Direct Cost Operating Cost Capital Cost Total Cost 1664 829 326 2819 % % % % Capital costs, at percent, represented a notable portion of Company X’s total costs. This relatively high capital costs could be explained by high investments in special equipment and fixed assets. In addition, Company X required a relatively large amount of working capital to support its wide variety of products. The next step was to calculate product cost information and examine changes across six product lines and three costing systems. Exhibit 2 and Exhibit 3 present the results. Exhibit 2. Product Cost Information in Thousands of Dollars Product Line TCA ABC ABCEVA 6 Overlays Membrane Laser 1201 621 438 1043 681 415 1216 747 482 Roll Labels N’Caps Miscellaneous Parts 134 52 47 179 103 72 189 108 77 Total 2493 2493 2819 Exhibit 3. Changes in Product Cost Information after Including Capital Costs Product Line TCA to ABCandEVA ABC to ABCEVA Overlays Membrane Laser + % + % + % + % + % + % Roll Labels N’Caps Miscellaneous Parts + % + % + % + % + % + % Total + % + % The Integrated ABCEVA System, taking into account capital costs, revealed that the overall product cost was actually percent higher than either TCA or ABC estimated. The difference in product cost, however, was not uniform across all product lines. After adding capital costs to the product cost obtained from the ABC system, the greatest difference in product cost was observed in the Overlays product line (+ %) while the least difference was registered in the N’Caps product line (+ %). From this, it can be concluded that an arbitrary allocation of capital costs to the product cost obtained by using the ABC system would produce inexact product cost information. For example, adding percent to all product lines would distort the product costs for Company X. Company X’s management was surprised when presented with the results of using the Integrated ABCEVA System. Familiarized with the calculations used, the managers agreed that the results were correct. Knowing that the Overlays product line was the only product line which created economic value, they considered extending marketing efforts for this 7 product line. In contrast, for the Laser product line (considered to be profitable according to the TCA and ABC systems, but revealed to be destructive to shareholder value by the Integrated ABCEVA System), the managers announced changes in their pricing policies, as well as additional cost reduction efforts. Furthermore, they considered new outsourcing policies for unprofitable low volume product lines (such as N’Caps and Miscellaneous Parts). Data Analysis for Company Y The data analysis for Company Y also began with an examination of its cost structure. As in Company X’s analysis, Company Y’s costs for 1998 were evaluated by paring the percentages of direct costs (direct labor and direct material)、 operating costs (overhead) and capital costs as shown in Exhibit 4.