Cost Analyzing
Request rewrite or corrections to attached paper. Teacher comments included and highlighted in yellow.
Create a 9-slide presentation in which youanalyze cost accounting practices to make a recommendation about whether or notto accept a purchase offer at a lower price than normal. You may either recordthe presentation or write a 2-3 page supporting report.
Scenario
The Acme Pickle Company has distributedpickles under the “Florida’s Best” brand for eight years from itsproduction facility in Jacksonville, Florida. It sells the pickles to stores inthe southeastern United States. Acme normally produces between 8,000 and 10,000cases of pickles a month but has the capacity to produce 12,000 cases withoutadding equipment or personnel.
The owner of a twenty-store supermarket chainin Wisconsin, called Super Deals, visits friends in Florida and is impressedwith the quality of “Florida’s Best” pickles. He approaches you, anAcme Pickle account manager, with an offer to buy 2,000 cases of pickles to usein a special promotion at his stores. He is thinking of something such as:
“Free jar ofFlorida’s Best pickles with every purchase of forty dollars or morethis monthonly!”
He offers Acme a price of $9.50 per case,knowing that it is a very substantial discount from the normal selling price of$20 a case. Acme’s management is inclined to turn the offer down, because theircost is calculated at $10.00 a case. They believe they would lose money if theysold at $9.50 a case. You, on the other hand, believe that some errors havebeen made in the cost accounting.
Your Role
You are the account manager for Acme Pickles.
Requirements
Your analysis for the Controller and SalesManager is needed to suggest a different way of calculating the pricing of thepickles that may be lower. As part of your analysis, address the followingitems:
Explain why some production costs are variable and some arefixed.
Analyze the benefit of recalculating the cost of pickleproduction.
o How would yourecalculate it?
o What would theresult be?
o What is the benefitto the company of recalculating the cost?
Analyze how financial accounting of production cost differs frommanagerial accounting of production cost.
o Explain thedifference between the two accounting methods.
o Identify thebenefits and drawbacks of each method.
Recommend a plan of action to management regarding Super Dealsoffer.
Below is the cost report for a recent month.In this month, Acme produced 9,000 cases and sold them at $20 per case, whichis Acme’s normal selling price. Nine thousand cases are well beyond Acme’sbreak-even point, enabling Acme to record a substantial profit at thenine-thousand-case level.
|
Acme Pickle Company Cost Report |
|
|
Item |
Cost |
|
Cucumbers |
$15,000 |
|
Spices and vinegar |
11,000 |
|
Jars and lids |
10,000 |
|
Direct labor, paid by the case |
30,000 |
|
Line supervisors, on salary |
10,000 |
|
Depreciation on factory |
10,000 |
|
Property taxes on factory |
3,000 |
|
Insurance on factory |
1,000 |
|
Total Costs: |
$90,000 |
|
Cost per case (9,000 cases produced) $10.00 |
|
Deliverable Format
Your team lead wants to share this analysisacross remote locations of the organization and is hoping you will set thestandard for how analyses and decisions of this type should be presented andsupported. Your team has requested either a recorded presentation (includingslides and notes) or a presentation and supporting reporting that can bedistributed as a model. Prepare a presentation of at least 9 slides usingPowerPoint or software of your choice detailing your recommendation and theinformation you used to make your recommendation. You can either record thepresentation or prepare a separate report supporting the presentation.
If you choose to record your presentation, youmay use Capella-supported Kaltura Media or another technology of your choicethat produces a shareable URL. Kaltura is recording software that can be usedto create webcam, screen, and audio recordings. Refer to the MBA ProgramResources for the Using Kaltura tutorial to prepare for this option. If youchoose to use something other than Kaltura Media, ensure that it creates ashareable URL and can be embedded in the courseroom to ensure faculty canaccess your recording.
Note: If you require the use of assistivetechnology or alternative communication methods to participate in theseactivities, please contact [email protected] to requestaccommodations.
Recommendation requirements:
Presentation slides:
o Create at least 9slides detailing your recommendation and the information you used to make yourrecommendation.
o Include additionaldetails as slide notes.
Supporting information. Choose one of the following options:
o Record yourpresentation.
o Create a 23 pagereport to support your slides.
Related company standards:
The recommendation report is a professional document and shouldtherefore follow the corresponding MBA Academic and Professional DocumentGuidelines, including single-spaced paragraphs.
In addition to the presentation or report materials, include:
o Title (slide orpage).
o References (slideor page).
o Appendix withsupporting materials.
o At least twoAPA-formatted references.
Evaluation
By successfully completing this assessment,you will demonstrate your proficiency in the following course competenciesthrough corresponding scoring guide criteria:
Competency 1: Explain how accounting concepts and practicesimpact financial reporting.
o Explain why someproduction costs are variable and some are fixed.
Competency 2: Apply principles of accounting to assess financialperformance.
o Analyze howfinancial accounting of production cost differs from managerial accounting ofproduction cost.
Competency 3: Analyze accounting information to support businessdecisions.
o Analyze the benefitof recalculating the cost of pickle production.
o Recommend a plan ofaction to management.
Competency 4: Communicate financial information with multiplestakeholders.
o Communicateaccounting information clearly.
Faculty will use the scoring guide to reviewyour deliverable as if they were the Controller or Sales Manager. Along withreviewing the content, they will also review the way you present this content.Review the scoring guide prior to developing and submitting your assessment.
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