ETHICS For example, Metropolitan life Insurance Company paid over $20 million in fines and must refund more that $50 million to policyholders because some of its agents illegally sold policies as retirement plans. An AMB system that tracks policy sales by type. Age of policyholder. Agent, and policyholder's objective could give an early warning signal of problems. A key point is that companies are expected to exercise control over their operations. If there is room for ethical misconduct, the company must develop the means to identify and correct abuses. As the cost of measurement decrease and the cost of errors increase, the existing cost management system is no longer optimal. Exhibit 2.10 illustrates how changing error and measurement cost can make an existing cost management system obsolete. As the exhibit illustrates, a more accurate cost management system is mandated because of changes in error and measurement costs. Firms, then, should consider implementing an AMB system if they have experienced a decrease in measurement costs and an increase in error costs. Although the majority of firms still use a traditional cost management system, the use of activity-based costing and activity-based management is spreading.
and interest in contemporary cost management systems is high.
ETHICS For example, Metropolitan life Insurance Company paid over $20 million in fines and must refund more that $50 million to policyholders because some of its agents illegally sold policies as retirement plans. An AMB system that tracks policy sales by type. Age of policyholder. Agent, and policyholder's objective could give an early warning signal of problems. A key point is that companies are expected to exercise control over their operations. If there is room for ethical misconduct, the company must develop the means to identify and correct abuses. As the cost of measurement decrease and the cost of errors increase, the existing cost management system is no longer optimal. Exhibit 2.10 illustrates how changing error and measurement cost can make an existing cost management system obsolete. As the exhibit illustrates, a more accurate cost management system is mandated because of changes in error and measurement costs. Firms, then, should consider implementing an AMB system if they have experienced a decrease in measurement costs and an increase in error costs. Although the majority of firms still use a traditional cost management system, the use of activity-based costing and activity-based management is spreading.and interest in contemporary cost management systems is high.
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