Product Pricing Recommendation

User Generated

zontvey215

Description

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.

Introduction

This portfolio work project will help you to assess a request, complete an analysis to understand the impact on an organization, provide a recommendation, and communicate that recommendation.

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.
    • 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 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 Adobe Connect, 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. Adobe Connect is web conferencing software that can be used for individual or group presentations, as well as collaborative needs, such as meetings and sharing documents. Refer to the MBA Program Resources for the Using Kaltura or Using Adobe Connect tutorials to prepare for this option. If you choose to use something other than Kaltura Media or Adobe Connect, ensure that it creates a shareable URL and can be embedded in the courseroom to ensure faculty can access your recording.

Recommendation requirements:
  • Presentation slides:
    • Create at least 9 slides detailing your recommendation and the information you used to make your recommendation.
    • Include additional details as slide notes.
  • Supporting information. Choose one of the following options:
    • Record your presentation.
    • 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:
    • Title (slide or page).
    • References (slide or page).
    • Appendix with supporting materials.
    • 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.
    • Explain why some production costs are variable and some are fixed.
  • Competency 2: Apply principles of accounting to assess financial performance.
    • Analyze how financial accounting of production cost differs from managerial accounting of production cost.
  • Competency 3: Analyze accounting information to support business decisions.
    • Analyze the benefit of recalculating the cost of pickle production.
    • Recommend a plan of action to management.
  • Competency 4: Communicate financial information with multiple stakeholders.
    • 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.

Criteria Non-performance Basic Proficient Distinguished
Explain why some production costs are variable and some are fixed. Does not explain why some production costs are variable and some are fixed. Identifies fixed and variable production costs but does not explain why they are so. Explains why some production costs are variable and some are fixed. Explains why some production costs are variable and some are fixed and provides examples.
Analyze the benefit of recalculating the cost of pickle production. Does not analyze how the production cost can be recalculated. Explains that the production cost can be recalculated but does not explain the benefits. Analyzes the benefit of recalculating the cost of pickle production. Analyzes the benefit of recalculating the cost of pickle production and includes examples of benefits to the company.
Analyze how financial accounting of production cost differs from managerial accounting of production cost. Does not analyze how financial accounting of production cost differs from managerial accounting of production cost. Explains the difference between managerial and financial accounting but does not analyze the difference it would make in the production cost of pickles. Analyzes how financial accounting of production cost differs from managerial accounting of production cost. Analyzes, in detail, how financial accounting of production cost differs from managerial accounting of production cost and provides examples illustrating the differences in taxes and profits.
Recommend a plan of action to management. Does not recommend a plan of action to management. Suggests potential actions to management. Recommends a plan of action to management. Recommends a plan of action to management using sound financial information to support the recommendation.
Communicate accounting information clearly. Does not communicate accounting information effectively. Communicates accounting information, but some information is not clear. Communicates accounting information clearly. Communicates clearly and engages the reader with the fluidity of expression. There are few if any errors of mechanics, grammar, or style.

User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Thank you for working with me






Relevance to output decisions
Differences in the ability of managers to control them.
Level of variation with output produced
Dependability on production





Period taken to change or pay the costs
Influence of external stakeholders.
Differences in defining attributes







Determine the variable cost per unit
Calculation of contribution margin per unit
Multiply the unit contribution margin with the number
of cases produced
Get the difference between total profit after
recalculation and the value from present method of
costing.








Determination of products’ selling price range.
Helps in the selection from various products competing
the use of manufacturing resources.
Essential in the calculation of blockbuster products
Making decisions about availability and utilization of
spare capacity





Application in decision making and end users
Purpose for their preparation
Cost considered
➢ Variable and differential cost only
➢ Both production variable and fixed costs







Benefits
Records all costs related to production
Correct valuation of inventory
Drawbacks
Rigidity of financial accounting
Not suitable for making decisions







Benefits
Essential in making corporate decisions
Facilitation of marginal costing
Drawbacks
Only considers variable and incremental costs
Broad scope versus limited knowledge






Setting the selling price at any level of more than $7.33
Utilization of all the spare production capacity
Use of alternative sales offers.
Enhancement of organization profitability.








Use of managerial accounting of production cost for
decision-making
Use financial accounting in preparing organizations
financial ...


Anonymous
This is great! Exactly what I wanted.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Related Tags