The conventional cost management model is less-than-adequate for advanced
manufacturing systems. Traditional overhead allocation schemes, many of which “spread”
overhead costs on the basis of the ratio of overhead to direct labor costs, are still in use by a
great number of firms. This “peanut butter conspiracy” of cost accounting continues despite
the fact that overhead is often three to five times as great as direct labor. The impact on
product costing is devastating–labor intensive processes, which require little or no …