Voodoo Ltd Business Case Study

1769 WordsJul 10, 20188 Pages
Introduction Australia’s food and beverage industry is anticipating significant growth, with a majority of food and beverage executives expecting increases in revenues (84% of executives) (Thornton, 2013). For the purposes of this report, the focus will be on the product costing systems in place at Voodoo Ltd, concentrating on their applicability and effectiveness. Our aim is to identify the weaknesses in Voodoo Ltd’s current operations which may impede its growth in what is a dynamic and fast paced industry. Currently Voodoo Ltd is in a battle to retain its momentum as a leading firm in the food and beverage industry as it faces strong competition from competitors who are out performing them in production rates and at lower prices…show more content…
Therefore according to Fisher and Krumiede (2012), relevant cost information is essential for profitability analysis and strategic planning. For example, a few years ago, after implementing a more detailed costing system, Nestlé SA Chief Executive Peter Brabeck made an unexpected and alarming discovery: His company was producing 130,000 variations of its various brands, and 30 percent were not making money (Ball, 2007). Although almost two-thirds of Australian executives (63%) believe that retailers reducing product range/varieties on their shelves will negatively affect their businesses (Thornton, 2013). Voodoo Ltd has taken initiative and experienced exponential growth in their new brands that they have created to attract new customers. However, Voodoo Ltd should not lose focus from its signature products. Voodoo Ltd should look to reassess which brands are not economically viable and remove them from production. ii. How a product costing system could improve pricing of Voodoo Ltd’s products Product costing is the key to inventory valuation and pricing (Alnestig & Segerstedt, 1996). Inventory valuation, which is usually prepared for accounting purposes, simply focuses on costs incurred within the manufacturing of the products (Jiao & Tseng, 1999, as cited in Sheldon et al., 1991). However, for longer-term decisions such

More about Voodoo Ltd Business Case Study

Open Document