This metal fabrication company believed their custom architectural work was highly profitable while standard parts barely broke even. Activity-based costing analysis proved the opposite was true.

Positive Outcomes

The controller spent six weeks alone rebuilding cost models from scratch. By tracking actual machine hours, setup time, and engineering hours per product line, he discovered standard parts generated 18% margins while custom work sat at 3%. The focused, uninterrupted work allowed for complex modeling that revealed custom projects consumed disproportionate engineering resources. This solitary analytical work produced clarity the team had lacked for years.

Negative Aspects

The new allocation method was so complex that production managers couldn't understand it. The controller's isolated work created a black box that others distrusted. Implementation stalled for months because he hadn't involved operations in developing the model. The technical accuracy was perfect, but organizational buy-in was zero.