Intelligent Conversation

Back in the day I worked for a manufacturer that made two very different products; the older product had declining sales and the newer product had increasing sales. The company used a standard costing system that showed both products generated the same percentage of profits. An outside director wanted to use an activity based costing system because he was sure that the new product was in fact making far less profit than the older product.

The Accounting Manager could speak chapter and verse about the advantages of the standard costing system he was using and also about the disadvantages of activity based costing. He couldn’t or wouldn’t speak to the disadvantages of a standard costing system and the advantages of an activity based costing system. So you were never going to have an informed and meaningful discussion with him which unfortunately is much like the one sided media environment we live today. Ten years later the company went bankrupt. Is this going to be deja vu all over again?

And that is all I’m going to say about that.

Great Depression 2.0
Photo by Inzmam Khan on