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Lehigh and Specialty Steel
- For each of the five sample products, compute the profitability per pound under the ABC system at Lehigh.
- For each of the five sample products, compute the profitability per pound per unit of the constraint under the TOC approach implemented at Lehigh.
- Critique the ABC and TOC approaches with respect to determining Lehigh’s optimal product mix. Which costing system/perspective should Lehigh use to determine its product mix? Devise an alternative method of calculating profits that combines the insights/assumptions of ABC and TOC in a way that is appropriate for Lehigh’s business situation while eliminating those insights/assumptions that are inappropriate in the current situation.
