Explain why some production costs are variable and some are fixed.

Request rewrite or corrections to attached paper. Teacher comments included and highlighted in yellow.

Create a 9-slide presentation in which you
analyze cost accounting practices to make a recommendation about whether or not
to accept a purchase offer at a lower price than normal. You may either record
the presentation or write a 2-3 page supporting report.
Scenario
The Acme Pickle Company has distributed
pickles under the “Florida’s Best” brand for eight years from its
production facility in Jacksonville, Florida. It sells the pickles to stores in
the southeastern United States. Acme normally produces between 8,000 and 10,000
cases of pickles a month but has the capacity to produce 12,000 cases without
adding equipment or personnel.
The owner of a twenty-store supermarket chain
in Wisconsin, called Super Deals, visits friends in Florida and is impressed
with the quality of “Florida’s Best” pickles. He approaches you, an
Acme Pickle account manager, with an offer to buy 2,000 cases of pickles to use
in a special promotion at his stores. He is thinking of something such as:
“Free jar of
Florida’s Best pickles with every purchase of forty dollars or more—this month
only!”
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 their
cost is calculated at $10.00 a case. They believe they would lose money if they
sold at $9.50 a case. You, on the other hand, believe that some errors have
been made in the cost accounting.
Your Role
You are the account manager for Acme Pickles.
Requirements
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.
o How would you
recalculate it?
o What would the
result be?
o 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.
o Explain the
difference between the two accounting methods.
o 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 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 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.
If you choose to record your presentation, you
may use Capella-supported Kaltura Media or another technology of your choice
that produces a shareable URL. Kaltura is recording software that can be used
to create webcam, screen, and audio recordings. Refer to the MBA Program
Resources for the Using Kaltura tutorial to prepare for this option. If you
choose to use something other than Kaltura Media, ensure that it creates a
shareable URL and can be embedded in the courseroom to ensure faculty can
access your recording.
Note: If you require the use of assistive
technology or alternative communication methods to participate in these
activities, please contact DisabilityServices@Capella.edu to request
accommodations.
Recommendation requirements:
·
Presentation slides:
o Create at least 9
slides detailing your recommendation and the information you used to make your
recommendation.
o Include additional
details as slide notes.
·
Supporting information. Choose one of the following options:
o Record your
presentation.
o Create a 2–3 page
report to support your slides.
Related company standards:
·
The recommendation report is a professional document and should
therefore follow the corresponding MBA Academic and Professional Document
Guidelines, including single-spaced paragraphs.
·
In addition to the presentation or report materials, include:
o Title (slide or
page).
o References (slide
or page).
o Appendix with
supporting materials.
o At least two
APA-formatted references.
Evaluation
By successfully completing this assessment,
you will demonstrate your proficiency in the following course competencies
through corresponding scoring guide criteria:
·
Competency 1: Explain how accounting concepts and practices
impact financial reporting.
o Explain why some
production costs are variable and some are fixed.
·
Competency 2: Apply principles of accounting to assess financial
performance.
o Analyze how
financial accounting of production cost differs from managerial accounting of
production cost.
·
Competency 3: Analyze accounting information to support business
decisions.
o Analyze the benefit
of recalculating the cost of pickle production.
o Recommend a plan of
action to management.
·
Competency 4: Communicate financial information with multiple
stakeholders.
o Communicate
accounting information clearly.
Faculty will use the scoring guide to review
your deliverable as if they were the Controller or Sales Manager. Along with
reviewing 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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