MBA-5010gillance2-1
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Product Pricing Recommendation
Capella University
MBA-FPX5010 - Accounting Methods for Leaders
Lance Gil
May 2024
Executive Summary
The Acme Pickle Company distributes pickles under the Florida’s Best brand for over 8 years now. They produce their pickles in a facility by Jacksonville Florida. The business sells to retailers in the Southeast of the United States and has been their niche region since inception. The ACME Pickle Company has a production capacity ranging from 8,000 to 10,000 cases of pickles on a monthly basis. The Acme Pickle facility has the ability to produce 12,000 cases of pickles for any given month at full production with current staffing in place allowing for full scale production bringing on additional efficiencies and cost benefits for the plant. Super Deals is a Wisconsin based Supermarket chain that is interested in working with the Acme Pickle Company due to their high quality pickles. Super Deals has made an offer to the Acme Pickle Company of $9.50 per case for 2000 cases of pickles from the Acme Pickle Company. Super Deals will be using the Florida Best Pickles to promote an instore campaign at Super Deals that provides a free jar of pickles for customers purchasing over 40 dollars of merchandise at their stores. The promotion named Free Jar will be offered for one month only with the potential of selling the Florida’s Best Pickles in the future at all Super Deals stores.
Acme Pickle Company sells the cases of Pickles at a $20.00 dollar price point for each case. Current cost restraints may make the deal unprofitable for Acme Pickle Company. In order to review this deal and better understand cost structures and efficiencies of scale we must be able to consider managerial accounting, financial accounting and recalculating production costs before making a final decision on the deal offered by Super Deals of Wisconsin. Financial vs. Managerial Accounting
“Both financial accounting and managerial accounting deal with financial information, however, with a different approach. Financial accounting aims to provide financial statements, including measuring a company’s performance to asses it’s financial health. Conversely, managerial accounting aims to provide financial information so managers can make decisions with their business strategies” (Bay Atlantic University 2023.)
The Acme Pickle Company’s current cost of a case of pickles is estimated at $10.00 dollars per case. This cost was calculated under the financial accounting methods. When we look at the managerial accounting we can the recalculate the cost structure and make more educated drilled down decisions based on a more accurate picture for current business needs. Recalculation
Let’s drill down into the numbers and make some recalculations based on the managerial method. The managerial method provides the ability to determine if there are adjustments that can be made for additional revenue and provide confirmation of cost structure and pricing strategies moving forward. Let’s review the opportunity including the new additional revenue and 2000 cases and see where we are with this new addition of business from Super Deals. Current monthly production is based at 9000 cases of pickles and the sell for price point is at 20 dollars per case of pickles. The 9,000 cases fall within the range of 8 to 10 thousand cases per month and
is adequate with current cost of goods per our existing cost structures at 8 to 10 thousand cases per
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