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Mayers Tap, Inc. has a poorly designed cost accounting system and is in the process of redesigning it. This case provides background details for the rest of the Mayers Tap, Inc. series.

Mayers Tap, Inc. has decided to redesign its cost system. In this case, the budgeted costs have to be allocated to the machine level. The teaching objective is to demonstrate two-stage allocation and the sensitivity of cost data to allocation base selection.

Mayers Tap, Inc. has decided to redesign its cost system. In this case it uses three different cost center designs to determine how the new system should be designed. Students are asked to drop unprofitable products under the three scenarios and explain the effects on the income statements. The teaching objectives are to demonstrate to students that the selection of cost centers is critical to the generation of accurate standard costs.