This essay focuses on Product Pricing Recommendation.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.
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.
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 inclines to turn the offer down, because their cost is to calculate at $10.00 a case. They believe they would lose money if they sold at $9.50 a case.
You are the account manager for Acme Pickles.
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:
·Firstly, Explain why some production costs are variable and some are fixed.
·secondly, Analyze the benefit of recalculating the cost of pickle production.
Thirdly, How would you recalculate it?
Further, What would the result be?
Finally, What is the benefit to the company of recalculating the 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.