Accounting

In this scenario, we have to determine whether or not to go with Maria??™s various suggestions to increase or decrease production, decrease the prices or to fulfill a bulk order which would decrease the capacity of the other retail sales but would allow the company to run at full capacity. We have been given business information as well as comparison data to make decision with respect to consideration of the bulk order, consideration of a purchase from a competitor and reducing prices to increase demands. With this information, we have to make the following decisions: (1) Make or buy; (2) Sell or Process More; (3) Retain the equipment; (4) Get into a different business segment such as the peanut butter cookies; and (4) Allocate more production to limited resources. With regards to the bulk sale, I feel that this is not the best scenario for the company, to maximize the operating product; the company should make more of the lemon creme cookies because it has a greater contribution margin. The bulk order should not be considered especially if the other cookie orders are running at full capacity as it would exceed production capacity. It would not be in the best interest to accept the bulk order of the cookies if it is less per unit sale. This would mean that the contribution margin is less than the fixed costs. Further, even if the contribution margin is greater than zero we can still see that it will be a loss to the company. For this reason, I choose to not go with the bulk order. There are three points to consider in cost accounting which include, fixed costs, variable costs and breakeven points. These are part of the details that are necessary when it comes to running a business. In this scenario, Aunt Connie??™s Cookies can use the accounting system to determine where the profitable points will be by evaluating the relationship between cost, volumes, and profits. In order to make the best decisions for the company it would be best to review past sales and profit information to see where best to make the decisions. The company needs to be careful in reducing prices so that volumes are not increased to level that are unattainable and not at the expense of resulting lower profits. Further in performance of the simulation, if the company produces more cookies this will cause the cost of the ingredients to rise, which is a variable cost. The variable and fixed costs can be seen within the correlation. During the simulation, I also decided to increase fixed costs through advertising and went with Maria??™s suggestion to increase the margin to the distributors in order to increase volume. According to the reading, the cost accounting system requires five parts which include (1) a measurement basis; (2) inventory valuation method; (3) cost accumulation method; (4) cost flow assumption; and (5) recordation of inventory cost flows. It should be noted that businesses can use many different variations of alternatives for cost accounting. We have to consider the type of costs (fixed and variable) as it is shown through inventory accounts. There are three alternatives which can be used such as historical, normal historical and standard costing. Cost accounting systems are ???techniques used to determine the cost of a product, service, customer, or other cost object??? (Horngren, Sundeam, Stratton, Burgstahler & Schatzberg, 2008). In this simulation, we were given past historical information to help Maria make decisions. A cost accounting system has ???to provide accurate information to help managers decide??? (Horngren, Sundeam, Stratton, Burgstahler & Schatzberg, 2008). To make the decisions easier for managers, all information with the Cost Accounting System (CMS) must be reliable and accurate. The CMS consists of two parts (1) costs accumulation which natural classification or (2) cost assignment. All of these must be used in the determination of making decisions, especially for a company like Aunt Connie??™s Cookies.