provided in the case, regarding pricing decisions, decision to discontinue or continue a product and product design. A detailed analysis of the problems faced by Wilkerson Company is as follows. Analysis Based on the operating results of March 2000, we see that the company has grouped its overheads into 5 cost items, as below: Machine-related expenses Setup labor cost Receiving and production control Engineering Packaging and shipment Current Method - Volume Based Costing As per the given information
Words: 1834 - Pages: 8
strategies to emphasize on the going-concern. Contract pricing issue The three contracts accepted earlier this year suggest the current pricing scheme does not provide sufficient revenue to cover the relevent expenses. Project cost management is critical to serve as a basis to measure cost and productivity of each project. Therefore, the IT systems should implement a project costing function to support more appreciate pricing decisions. Cash-flow management issue Recent delays in vendor
Words: 1119 - Pages: 5
initiatives including seeking 25% price reductions from suppliers, reducing the total number of suppliers and seeking more long-term fixed pricing agreements. Havilland recently received submissions for an RFQ for the supply of supply flap shrouds and equipment bay doors. The pricing received raises some concerns however, as there are large variations in pricing between the lowest price from Marton Enterprises Inc. (Marton) and the highest price from the incumbent, Dollard Plastics (Dollard). There
Words: 11214 - Pages: 45
analysis, decision analysis, finance, microeconomics, and operations management. The themes stressed throughout the course are: the notion that information is costly; the circumstances that necessitate cost allocation, and the idea that different costs and different allocation schemes apply for different purposes; and the fundamentals of incentive and compensation plans. Among the topics covered are cost behavior, cost-volume analysis, relevant costs, and the use of cost information for decision-making
Words: 1933 - Pages: 8
COSTING AND PRICING The key principle of costing is to calculate the true cost of a product or service while pricing is determined by demand, market conditions and factors which influence pricing such as advertising, promotional activity and the ability to differentiate from competitive or alternative products and services. Costing is based on the simple principle of recovering cost. Cost are classified as Variable or Fixed. Variable costs are those costs which vary in direct proportion
Words: 2587 - Pages: 11
Problems within the operation and accounting techniques of the Waltham Motors Division of the Marco Corporation were discovered by newly assigned, division-level management following the acquisition of the company and the loss of a contract. This text summarizes some of the issues found within the company operations and explains the importance of effective cost management by exploiting the company’s current accounting system’s strengths and weaknesses. Additionally, this text highlights available
Words: 1755 - Pages: 8
offerings, Carpet PA-2, is made using a special machine that cannot be used to make any other line of flooring. To improve Carpet PA-2’s margin, the company decided to increase its price per square yard from $3.95 to $4.75, effective January 1, 2003—a decision made in part due to the company’s anticipation of a large fund need in the near future. Their competitors, however, held their prices constant at $3.95 on carpets competitive with PA-2. The subsequent two seasons saw a drop-off in the company’s
Words: 3297 - Pages: 14
Driven Activity Based Costing Executive Summary Heryzin Baskerville National Graduate School of Quality Management Robert Kaplan introduced Activity Based Costing (ABC) in the late 1980s. It can be considered as the modern alternative to absorption costing, and allowing managers to better understand product and customer net profitability. Kaplan view is that the ABC target state will provide organization leadership with better information to make value-based decisions. Over the past 15
Words: 336 - Pages: 2
cut prices, based on contribution margin, to just cover short-term variable costs, what consequences could it experience? Contribution margin-based pricing attempts to maximize profit generated from the sale of each unit of product by maximizing the difference between that product’s price and variable costs, or contribution margin. Under this pricing strategy, only variable costs, which increase with a higher sales volume and decrease with a lower sales volume, are considered; fixed costs are assumed
Words: 3493 - Pages: 14
1. Activity costing would be appropriate 1. An activity-based costing system may be appropriate for Wall Décor, when overhead allocation based job-order costing provides product cost distortion. As seen on previous case, this distortion happens when one product is manufacturing in high volume and the others are manufacturing in complexity as well as in low volume. In this situation Wall Décor should change its costing system for selling its high volume produced products whereas low-volume produced
Words: 843 - Pages: 4
