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  • May 1995 (Revised April 1998)
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AT&T Paradyne

By: Robert S. Kaplan
  • Format:Print
  • | Language:English
  • | Pages:21
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Abstract

A company making data communication devices has adopted a Total Quality philosophy for working with suppliers, employees, and customers. The finance group finds its existing cost system has become obsolete because of a shift from manual to automatic production technologies. As part of its improvement activities, the group develops an activity-based costing system to replace the obsolete standard costing system. The new system is being used to value inventory for financial reporting, provide monthly feedback on operational efficiencies, and inform product managers about the cost and profitability of their products. It is also being used for target costing, influencing decisions made by product design and development engineers so that future generations of products can be produced at lower cost. The case enables discussion about how well a single system functions for these diverse roles, and to compare this company's target costing approach with those used by Japanese companies, such as Nissan, Komatsu, and Olympus.

Keywords

Decisions; Product; Corporate Accountability; Activity Based Costing and Management; System; Performance Efficiency; Financial Reporting; Operations; Technology Industry; Telecommunications Industry

Citation

Kaplan, Robert S. "AT&T Paradyne." Harvard Business School Case 195-165, May 1995. (Revised April 1998.)
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About The Author

Robert S. Kaplan

Accounting and Management
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  • We Need Better Carbon Accounting. Here's How to Get There. By: Robert S. Kaplan and Karthik Ramanna
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