Blue Ridge Manufacturing Case - Mgmt Accounting

The purpose of this report is discussing the case of Wilkerson Company that confronting tough competition in price cutting in pumps which caused to a big drop of pre-tax operating income from 10% to 3%. After observing the existing costing allocation, we found out there is an issue on the existing costing report that the manager could not be able to see the real situation. In light of this, there will be brought to the discussion on the feasibility of using an alternative costing method – Activity based costing (ABC) in the latter paragraphs.

2. Any of their sales transactions to vendors for their products, especially sales requiring timely delivery.

As shown in Exhibit 2, I have determined the allocation rate of each cost driver, and that will allow me to assign them to different cost pool; base on the activities. Adding up all the number I assigned, will give me the overhead cost for each label of a batch. Sum the number

First, we will take a look at their primary activities, these are inbound logistics, operations, outbound logistics, marketing and sales, and service.

Blue Ridge Manufacturing is one of a dozen companies that produces and sells towels for the U.S. "sports towel" market. A "sports towel" is a towel that has the promotion of an event or a logo printed on it. They're called sports towels because their most popular use is for distribution in connection with major sporting events such as the Super Bowl, NCAA Final Four, Augusta National Golf Tournament and the U.S. Open Tennis Tournament. Towels with college, NBA and NFL team logos, and promotions for commercial products such as soft drinks, beer, fast food chains, etc., are also big sellers.

Blue Ridge’s competitive strategy appears to be cost leadership, focusing on a narrow product type and offering for sale only in the southeastern states. Blue Ridge’s limited offering of products, only a sports towel for limited use and distribution, give it an edge in determination as there are only so many materials, designs, and processes required for this one type of product. Though Blue Ridge does focus on just the sports towel, there are still some aspect of differentiation which causes the firm’s competitive strategy to also deviate a bit towards product differentiation. Blue Ridge offers variations of its sports towels aside from its three customary sizes (regular, hand, and midrange),

The receiving overhead per unit of Flow Controllers produced = (0.78 X 20,000)/ 4000 = $3.9

John Deere Component Works (JDCW), subdivision of John Deere and Co. was in charged specifically of the manufacturing of tractor component parts. The demand for JDCW’s products had problems due to the collapse of farmland value and commodity prices. Numerous and constant failures in JDCW’s competition for bids, alerted top management to start questioning their current costing methods. As an outcome, the analysis has to be guided to research on the current costing methods with the intention of establishing legitimacy and to help the company in adopting a more appropriate costing system.

* Refer sheet “25000 Sales” for cost incurred and Gain/loss for AIFS for different scenarios and actual sales volume of 25000.

Focusing on sales which will include the building the sales in terms of the order amounts, numbers of our products through the internet, increase the sales of regular customers ,increasing the number of orders and selling content and advertising space for those who subscribe with us.

Blue Ridge Manufacturing is one of a dozen companies that produces and sells towels for the U.S. "sports towel" market. A "sports towel" is a towel that has the promotion of an event or a logo printed on it. They 're called sports towels because their most popular use is for distribution in connection with major sporting events such as the Super Bowl, NCAA Final Four, Augusta National Golf Tournament and the U.S. Open Tennis Tournament. Towels with college, NBA and NFL team logos,

Activity-based-costing (ABC) system find activities as the drive for each cost, calculate the average cost per driver’s activity, and times budgeted activities for budgeted cost. It is worth mentioning that ABC system is not used to find problems in cost records, or predict future cost based on that.

Company operates in the Industrial Sector – Services, and Industry – Regional Airlines. According to the Standard Industrial Classification System (SIC), company belongs to the industry group 451: Air

The five primary activities are: inbound logistics, operations, outbound logistics, marketing and sales, and service. The four support activities are: procurement, technology development, human resource management, and infrastructure.

These value adding activities generate numbers of benefit to the organization. They help in saving relevant cost and improve efficiency. Once the company successfully transfer product to customers, it will attain the revenue. If these cannot be done effectively, it will not generate and profitability to the organization.