Would you buy a Can of Coke (or Pepsi) for $1 Million?

Say there's a bottling/canning factory with $1,000,000 overhead or fixed cost. It has a capacity of 10,000,000 cans per year. Obviously the cost of one can is 10 cents (plus any variable cost, or we can assume here that it is 'fully automated').

What if (for whatever reason and just to prove a point) all year long, the factory just ran ONE coke can through the factory?
What is the cost of that can? Most people would answer $1,000,000. That's what cost accounting has drilled us to believe.

Well good luck selling that one can to consumers at a price that covers the 'cost'.

Shouldn't it still be 10 cents and there is a cost of $999,999.90 in unutilized capacity?
Standard cost systems do not capture such important considerations. This is especially critical in times of changing product mixes and volumes.

Yes, this example is drastic, but it proves the point. Relying on standard cost for pricing decisions can lead to devastating consequences:
The company starts inching up the sales price because "cost has gone up" --> customers are lost --> volume goes down further --> standard cost goes up more --> time to increase prices again --> the company has entered a death spiral.

This is happening as I type. Not as drastic as in the example, but across all company sizes, types, and industries. I am seeing it over and over again.
The batch of MBAs and ACC graduates that understand the threat are not in positions yet to impact a shift in senior executive awareness.

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