Classic Pen Co Case
Yaoyao Du, Benjamin Ebner
Northeastern University
ACCT 2301
Oct 25, 2019
1
Identifying Cost Drivers Analysis
Indirect Labor
Indirect Labor in the case was given as a flat cost of $20,000. Also given was a
breakdown, by percentage, of job content: 50% allocated to scheduling/handling production runs,
40% physical changeover, and 10% maintaining records. Identifying the cost drivers relied on
our understanding of each component of the indirect labor, thus, for the scheduling/handling of
production runs, the cost driver from our understanding was production runs. For physical
changeover, we chose setups, and for maintaining records, we decided parts administration.
Fringe Benefits
Fringe benefits was also given as a flat cost of $16,000, with a percentage breakdown of
40% labor expenses (both direct and indirect). Furthermore concluding the cost driver is labor
