Question 1: Cost Flows in an Organization

Assume you are a division manager for a manufacturing company of your choice.

• Describe the company and identify the division you manage.

• Think about the costs associated with developing and manufacturing your product. Identify whether the company would use process or product costing and describe why the selected method is most appropriate.

• Identify the manufacturing costs involved in producing your product and classify each cost as direct materials, direct labor, or manufacturing overhead.

• Discuss the most appropriate method for allocating the manufacturing overhead. How would different allocation methods affect the bottom line for your division?

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Question 2: Absorption, Variable, and Activity Based Costing

Continuing the scenario from the QUESTION 1 discussion, think about the costs to manufacture your product. Review the concepts of activity based costing.

• If you implemented activity based costing for your division, what additional costs would you consider as manufacturing costs? How would you allocate those costs to your division?

• Would activity based costing give you a more or less realistic picture of your divisions costs incurred to produce revenue?

• If you chose to not fully implement activity based costing, what would you have learned about your department's costs that would help you operate more profitably?

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Question 3: Cost, Volume, Profit Analysis

Continuing the scenario from the Question 2 discussion:

• Identify and classify the fixed and variable manufacturing costs for producing your product.

• Describe what contribution margin means and how you would calculate it for your division.

• What types of decisions could you make using the contribution margin? Give specific examples of how you might use the contribution margin to make decisions about product pricing, acceptance of special orders, increasing or decreasing component costs, or incurring additional advertising expenses.

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Question 4: Budgeting and Balanced Scorecard

Continuing the scenario from the Questions 2 and 3 discussions consider the information provided by using a balanced scorecard.

• Discuss what a balanced scorecard is and how it might benefit your company.

• Identify and discuss the types of information that would be included in a balanced scorecard that would not be readily apparent on your financial statements.

• How could you use the information from the balanced scorecard to improve operations and increase your division's profitability? Provide at least three specific examples.

Be sure to cite any sources using APA style. You may use this APA Citation Helper as a guide.