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A Report On Bird Feeder Division Essay

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The following report for MDE bird feeder division includes the classification of costs such as product costs, period costs, fixed costs, and variable costs. This report also includes a cost-volume-profit analysis to determine contribution margin as well as the breakeven point for this company. A budgeted model is also included to show actual activity and is compared to the flexible budget. Budgeting process, budget variances and the recommendation to use the activity based costing system will also be discussed. The above will allow for a quantitative analysis, which will include areas that need improving along with recommendations for this company.
When conducting an analysis is important to classify costs. Product costs are costs that are assigned to a product for a specific purpose. These costs are associated directly in the making of a specific product. The bird feeder division has the following product costs: material-cedar, material-plastic, factory worker labor, materials-indirect, factory depreciation, factory utilities, and factory maintenance and repairs. Period costs are all costs in the income statement other than cost of goods sold. These costs are usually associated with the selling function of the business. The bird feeder division has the following period costs: shipping, sales commissions, office rent, advertising, liability insurance, office depreciation, and office salaries. After determining if costs are either product or period costs it is important to

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