Delaney Motors Case.

The current cost system allocates overhead costs once a year, as a function of direct labor dollars. This allocation strategy results in:

5. Fixed costs can be discretionary or committed. Using your judgment based on the discussion in the case, identify which costs are likely to be discretionary. Assuming that management is able to decrease discretionary fixed costs by 10%, what would be the impact on Bridgestone’s break-even point revenues?

Owens & Minor is a distributor of surgical and medical supplies to hospitals and other health care facilities. Due to changing demand from customers, the company is facing increased operating costs, which has resulted in lower profit margins and even losses. In 1993, O&M recorded an $18 million profit, which was reduced to a loss of $11 million in 1995. The entire industry is experiencing similar difficulties. In an effort to resume profitability, O&M is evaluating alternatives to “cost-plus pricing”. Cost-plus pricing does not reflect the true cost of the services provided by O&M. Customers are demanding more of O&M while

The budget analysis shows that the labor hours of the firm are higher than the budgeted amount. As such, the firm needs to evaluate the cost benefit analysis of making or buying their products. To make this decision, various factors need to be considered. Before making the decision, Peyton needs to evaluate the marginal costs and revenue of making versus buying the products. The firm should take the option which provides the highest marginal profit which is the

Model Description The model takes much of the busywork out of the case, enabling students to spend more time on interpretation and evaluation. Like most case models, the student and instructor versions differ only in regard to the input data. The instructor’s version contains the complete base case inputs, while these inputs are zeroed out in the student version of the model. The model for this case takes the input data (cost pool values and allocation rates) and allocates overhead costs from the three overhead departments to the three patient services departments using all four allocation methods. Additionally, the model calculates the profitability of each patient services department under each allocation method. The model’s (instructor’s version) Input Data and Key Output sections are as follows:

If Marlene Herbert were to discontinue place mats, he would miss $270,000 that will go toward Mendel paper company fixed cost. The company currently has a plant overhead that is estimated at $420,000 for the quarter. In addition to the fixed plant overhead, the plant incurs fixed selling and administrative expenses per quarter of $118,000. This draws the company to a total fixed cost of $538,000. If Marlene Herbert were to discontinue the second highest contributor to the fixed cost, he would need to increase the volume of computer paper and lower material cost to help pull the contribution margin of the lowest product up to help support the lost of a whole product line.

3. For each of the individual overhead accounts at Bridgeton, do you believe the given cost is variable, fixed, or something else? Why? (Use information or evidence from the case to support your evaluation, if possible. For most of these costs, there is no single right answer from the case information, so the goal is to come up with a reasonable estimate.)

Based on our projections for the years 2002-2004, the biggest driver that effects debt is the company’s operating expenses. Based on the history of the upward trend of operating expenses, our recommendation is that The Body Shop needs to concentrate on lowering the operating expenses, and keeping those expenses around 45% or lower in order to avoid borrowing money. Our 45% recommendation includes a safety net which will prevent having The Body Shop borrowing cash if sale do not continue to climb at a significant rate.

Sales centre A, they had achieved great success over the last year and consistently outsells other sales centres. In fact, due to the large number of accounts managed by our sales team and larger staff, Sales centre A is expected to sell as much volume as the other two sales centres put together. That means, the expense budget for Sales centre A must be more than other, at least twice time then the other centre. Because, they need a lot of money to pay for their cost, such as Wages, telephone, office supplies, and commission. That seems not fair for Sale centre A.

v. What are the limitations, if any, to the estimates of the profitability of the two customers? (Hint: Consider what improvements could be made to the accounting system to obtain more accurate costs)

Maitland Motor has been a dealer of Lincoln Mercury and Ford in Twin Cities for nearly 15 years. Maitland Motor has been seen as a successful dealer with a good financial base since went through its difficult period. What have made the dealer has had a good base in financial resource is its contribution with a beneficial set of Automobile and trucks leases with two divisions of Wisconsin National, Inc.: Universal Specialty Steel and Mid South Tool and Die. This case involves the two main persons, who are responsible fore the situation: Bruce Maitland; owner of the Maitland Motor and Chuck Harper;

Allocating overhead costs is one of the important tasks and is necessary to be done by management accountant. One key reason is that in term of pricing strategies, many firms decide their products’ selling price based on their cost. And the selling price has to cover all the costs and profit.

The case seeks to assist Zauner’s comptroller, Yu Chia-yi, in determining the best costing method for their overhead costs, in addition to

The primary reason why Ford designed the VEP was that Ford believed its stock was undervalued and the undervalued stock was limiting the company 's ability to use its stock for acquisitions or to attract, retain or incentivize employees. Ford thought the VEP would enhance the value of its outstanding shares because the recapitalization will highlight its cash reserves and cash flow generating capacity, and also indicates management 's confidence in the future of the business. In addition, Ford believed the adjustments in the employee incentive plans by the recapitalization will tie Ford management 's compensation even more closely to the performance of its stock price.

companies and investments in financial instruments. Fourth, the currency turmoil affects U.S. imports and exports as well as capital flows and the value of the U.S. dollar; the U.S. deficit on trade was rising as these countries import less and export more. Fifth, the crisis is causing economic turmoil that is exposing weaknesses in many financial institutions in Asia; some have gone bankrupt. The economic problems of the troubled Asian economies are adversely affecting the United States, Japan, and others.