Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Business Management Expert

Problem 1: Sandy Pat, president of the Pressure Cooker Company, was reviewing the product profitability reports with the management accountant, Youl Gaspar. The following conversation took place:

Sandy: I have been reviewing the product profitability reports. Our high-volume cooker, the C-20, appears to be unprofitable, while some of our lower-volume specialty cooker in the S-30 series appear to be very profitable. These results do not make sense to me. How is the product profits determined?

Youl: First, we identify the revenues associated with each product line. This information comes directly from our sales order system and is extremely accurate. Subsequently, we identify the direct materials and direct labour associated with making each of cookers. Again, this information is very accurate. The final cost that must be considered is factory overhead and this is allocated to the products, based on the direct labour hours employed to assemble the cooker.

Sandy: What about distribution, promotion, and other post-manufacturing costs which can be associated with the product?

Youl: According to generally accepted accounting principles, we expense them in period that they are incurred and do not treat them as product costs.

Sandy: Another thing, you say that you allocate factory overhead according to direct labours. Yet I know that the S-30 series have very low volumes but need extensive engineering, testing, and materials management effort. They are our newer, more complex products. It seems that these sources of factory overhead will end up being allocated to C-20 line because it is the high-volume and therefore high direct labour hour product. Yet the C-20 line is easy to make and requires very little support from our engineering, testing, and materials management personnel.

Youl: I am not too sure. I do know that our approach is similar to which employed by many different types of companies. I do not think we could all be wrong.

Required:

problem1. Is Sandy’s concern valid and how may Youl redesigning the cost allocation system to address her concern?

problem2. Identify some of the implementation issues and elaborate on some benefits of new system.

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M96019

Have any Question? 


Related Questions in Business Management

Research paperassignmentwrite a 3-4 page apa formatted

Research Paper Assignment: Write a 3-4 page APA formatted paper comparing your organization's disaster recovery and business continuity plans with the best practices outlined in our course text. Content should include, b ...

Case study discharged for facebook commentsbetty nelson

CASE STUDY: Discharged for Facebook Comments Betty Nelson worked as an emergency medical technician for the First Alert Medical Response ambulance service in Redfern, Idaho. One day in a meeting with her supervisor, Nels ...

What are the difference between slack time and earliest

What are the difference between slack time and earliest start time in AON?

Assume that litigation will cost the plaintiff 100 and the

Assume that litigation will cost the plaintiff $100 and the defendant $100. Assume that settling out of court is free (SC=$0). What is the largest value of relative optimism (DEJ) at which the parties can still settle ou ...

A dns zone refers to a particular administrative space

A DNS zone refers to a particular administrative space within the global Domain Name System that has been assigned to one manager.

Discuss the appropriate uses of an raci matrix and describe

Discuss the appropriate uses of an RACI Matrix and describe a situation at your work where you might incorporate an RACI Matrix.

Review the following articlesarticle 1article 2article

Review the following articles: Article 1 Article 2 Article 3 Based on the religious discrimination lawsuits outlined in the articles, imagine that you work for a retail store, and you were asked to develop training for e ...

Researchnbspthe events surrounding the airing and aftermath

Research  the events surrounding the airing and aftermath of the investigative news story "For the Record," produced by CBS news and Dan Rather in 2004. Based on your research of what actually unfolded,  write  a 700- to ...

Why are problem-solving meetings conducted who should call

Why are problem-solving meetings conducted? Who should call such meetings? Describe the approach that should be followed.

Management 340 research paperfirst please research the

Management 340 Research Paper First, please research the following types of ethical theory: consequentialism, deontology, relativism, virtue ethics, and justice. Next, choose two philosophers' original texts to examine i ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen