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

Please draw on your experiences and what you have observed

Please draw on your experiences and what you have observed to address the following questions and topics. Choose a market for a good in your area that seems to be a perfectly competitive market. Answer the following ques ...

Concept paperyou have been put in charge of the database

Concept Paper You have been put in charge of the database systems for a large banking institution. You need to devise an extensive security strategy and backup management plan. Develop your documentation to include the s ...

Define consumer behavior and describe its relation in

Define Consumer Behavior and describe its relation in purchase decision making?

Explain the terms ethical issues business ethics and moral

Explain the terms ethical issues, business ethics, and moral philosophy. essay format but a small paragraph would do. also my professor uses turnitin so do not want any plagiarisms.

In 450 words with referenceswhat is involved with assessing

In 450 words with references: What is involved with assessing your competition? Why is it important? How can strong competitors benefit a company? Discuss the advantages of being a market follower. When would you apply t ...

Assignment managing the contractor-customer relationshipyou

Assignment: Managing the Contractor-Customer Relationship You are to write a three to four page paper that answers the following: 1. Discuss the ethical issues that can arise in contracting. 2. Analyze and discuss the st ...

This is a question in human resource managementwrite a

This is a question in human resource management: Write a brief paper on how you current or prior employer does job analysis and what forms of employee teams it uses.  Employer is:  Starbucks.   This only should be about ...

Why is product design important and what are the different

Why is product design important, and what are the different approaches taken?

Resolving ethical issues and dilemmasthe mission and vision

Resolving Ethical Issues and Dilemmas The mission and vision statements drive the outcomes of an NPO or NGO and generally involve social change or public service. For this reason, the daily operations of NPOs and NGOs ai ...

Discuss the importance of identifying and acknowledging

Discuss the importance of identifying and acknowledging short-term wins during change. What types of short-term wins are most meaningful? Why?

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

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