SUMMARY Blackheath Manufacturing Company produces a single product called Great Heath. The company recently employed a new cost accountant, Lee High, who aims to make another cost analysis over a period of three production weeks. He needed to determine the variable, semi-variable and fixed costs connected with the Great Heath production. Once it been categorized, he determined the cost per unit to break-even. The case shows Lee High was considering variable and fixed costs in determining the cost of goods sold per unit. He able to develop decision rules for the company’s owner, Charlton Blackheath, for the management decision-making. Based on Lee High’s information, Mr. Blackheath stated that an order could not be less than $7.00 per unit and additional sales decision rules for sales agent with commission and direct sales has no commission. The case then shows a series of sales description that were accepted or declined followed on these decision rules. However, a young file clerk decided to take a special order which is under-bid at $5.50 for 100 units of Great Heath based on her own assumption that this would be profitable for that volume. A later sales cost report was developed by Lee High showing cost per unit based on his predetermined costs analysis and profit per unit. Data showed the special order contribute a subsequent loss because of too low sales price per unit. Therefore, Mr. Blackheath fired the clerk for her error and mistake and set a new commission plan based together with adjustment of price per unit to $8.00 targeting to generate a higher profit. From this case, there is one issue that have been recognised, that is about one time special order that made by the clerk. The clerk, Adelaide Ladywell was fired because mistakes that have been done. So, here we want to justify whether Ladywell’s decision was reasonable or not.

QUESTION 1
Develop