Your analysis for the Controller and Sales Manager is needed to suggest a different way of calculating the pricing of the pickles that may be lower. As part of your analysis, address the following items:
Explain why some production costs are variable and some are fixed.
Analyze the benefit of recalculating the cost of pickle production.
How would you recalculate it?
What would the result be?
What is the benefit to the company of recalculating the cost?
Analyze how financial accounting of production cost differs from managerial accounting of production cost.
Explain the difference between the two accounting methods.
Identify the benefits and drawbacks of each method.
Recommend a plan of action to management regarding Super Deals offer.
Below is the cost report for a recent month. In this month, Acme produced 9,000 cases and sold them at $20 per case, which is Acme’s normal selling price. Nine thousand cases are well beyond Acme’s break-even point, enabling Acme to record a substantial profit at the nine-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 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 analysis across remote locations of the organization and is hoping you will set the standard for how analyses and decisions of this type should be presented and supported. Your team has requested either a recorded presentation (including slides and notes) or a presentation and supporting reporting that can be distributed as a model. Prepare a presentation of at least 9 slides using PowerPoint or software of your choice detailing your recommendation and the information you used to make your recommendation. You can either record the presentation or prepare a separate report supporting the presentation.
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