However, in general circumstances, a firm’s management
has varying degrees of control over its labor and
overhead resources. If excess capacity cannot be redeployed
or terminated, the joint products mix with the ABC
model may overstate its profitability and if excess capacity
could be redeployed to productive uses elsewhere within
the firm or terminated, the joint products mix with the
TOC model may understate its profitability. An ABC model
embedding management’s discretionary power over labor
and overhead resources was developed and used to make
joint product mix decisions. As illustrated in the paper, an
ABC model embedding management discretionary power