Destin Brass Co. ... The conclusion is that Destin needs to use an activity based costing approach instead of the traditional costing system.
By using the activity transaction based system, Destin comes up with different product unit costs. ... This approach will enable Destin to oversee each product’s cost more accurately and help them make better business decision because the costs are caused by activities/transaction.
The new costing system also explains why Destin’s competitors were able to lower pumps’ prices. Destin should make price adjustments according to the new cost of each product. ... Also, Destin can increase the price of flow controllers due to its high cost. ... For the valves, Destin can either keep its current price or cut it down a little bit in order to attract more customers and gain market share.
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