Tijuana Bronze Machining: Teaching Commentary

OVERVIEW This is a basic case in Activity-Based Costing (ABC) and Activity-Based Management (ABM). There is enough richness to the fact-situation to create a non-trivial calculational challenge for students without taking the case beyond an "introductory" level. Also, the business context for the calculations is rich enough to support good discussion on the managerial implications. I use Tijuana Bronze as the introductory case on ABC/ABM in the required managerial accounting course at Tuck and …showed first 75 words of 3008 total…

…showed last 75 words of 3008 total…discussion and show students the analysis reproduced above. The question is a good "antidote" to the idea that JIT is always "good"--not when receiving and handling costs are as high as in this case. I believe it is important to spend at least 10 to 15 minutes or so on this question to reinforce the concept that ABM is a dynamic concept, based on cost management, whereas ABC is a static concept, based on cost measurement.