Question: Accounting Cost Systems and Cost Behavior
You are applying for a managerial position at an innovative and rapidly growing company. This is a dynamic company that wants an individual who adds value to the organization. Managers at this company wear many hats, so the position requires managing products, people, and financial aspects of running the company.
As part of the interview process, you are required to make a presentation covering four different topics, one per module for this course.
You choose the company and the new product that you want to showcase in your presentation. It can be real or fictitious (based on an industry). This is for background purposes only. The presentation is to showcase your abilities and what you can contribute to the organization.
IBIS World (access on the Portal through the Online Classroom & Library, Additional Library Resources link) and BizStats have estimates of cost of goods sold and some other categories of operating expenses. Information about contribution margins is not available, but adding new products typically mean incurring both fixed and variable costs. Consequently, cost of goods sold is a reasonable estimate. Net operating income as a percentage of sales or some variation thereof may also be relevant if the new product is expected to contribute significantly to the bottom line. As a candidate for a position you would not have internal information available, but being resourceful and being a skilled researcher are desired traits for the position. IBIS World also has a wealth of other market statistics that may be helpful. Use listed background material and other resources as needed.
Required: Include the following items in your presentation.
• Present an idea for a new product.
• Describe the product.
• Show some cost estimates and pricing suggestion for this product based on research.
• What approach would you use to determine selling price (for example cost plus or target costing)? It is important when choosing a design.
• Explain your rationale for the pricing approach.
• Show expectations of growth and potential profit.