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Emerging Markets Case Studies Collection
ISSN: 2045-0621
Online from: 2011
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KK Metals: CNC process costing
| Title: | KK Metals: CNC process costing |
|---|---|
| Author(s): | Monica Singhania (Faculty of Management Studies (FMS), University of Delhi, New Delhi, India), Gagan Gandhi (Faculty of Management Studies (FMS), University of Delhi, New Delhi, India) |
| Citation: | Monica Singhania, Gagan Gandhi, "KK Metals: CNC process costing", Emerald Emerging Markets Case Studies Collection, (2012) |
| Keywords: | Activity based costing, Computer numerical control, Cost analysis, Pricing strategy, Production engineering, Traditional costing |
| Article type: | Case study |
| DOI: | 10.1108/20450621211284651 (Permanent URL) |
| Publisher: | Emerald Group Publishing Limited |
| Acknowledgements: | The authors would like to thank Mr Siddartha Surana, Deputy Managing Director, KK Metals Pvt. Ltd for providing continuous support and guidance throughout the case writing process. The staff of Accounts and Maintenance Departments need special mention for their efforts on collating the relevant data in carrying out the analysis. Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision making. The author/s may have disguised names; financial and other recognizable information to protect confidentiality. |
| Abstract: | Title – KK Metals: CNC process costing. Subject area – The application of activity based costing (ABC); calculating the cost of a CNC Process using ABC; designing a pricing strategy. Study level/applicability – The case can be used in the following courses: MBA program with specialisation in finance (to teach students the application of costing in services sector); MBA program in general management (to highlight the concept of activity based costing and its application); and under an elective course on management control systems in MBA programs (to highlight the strategy to determine price effectively). Case overview – The case highlights the application of activity based costing in arriving at cost and finally leading to development of price to be charged by KK Metals. The company wishes to compute the activity based cost of CNC process and develop the selling price for 194 precision turning services scientifically as opposed to the present strategy of being a price taker, largely on the basis of what essentially is prevalent in the local market within which KK Metals operates. The case gives an insight to numerous control variables that the management can consider while pricing its services. Expected learning outcomes – The case can be used to understand management concepts such as ABC, pricing and the role of efficiency in business processes. It can be used to: teach complexities involved in identifying activity driver(s) in case of ABC as far as application to service sector is concerned; help understand the use of costing as an effective tool in pricing strategy of the company; and help students realize the significance of inputs used for calculating per hour cost. Supplementary materials – Teaching notes are available. Consult your librarian for access. |
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