Cost Accounting

ASSIGNMENT

ACCOUNTING COST SYSTEMS AND COST BEHAVIOR

You are applying for a managerial position at an innovative and rapidly growing company. This is a dynamic company that wants an individual who adds value to the organization. Managers at this company wear many hats, so the position requires managing products, people, and financial aspects of running the company.

As part of the interview process, you are required to make a presentation covering four different topics, one per module for this course.

You choose the company and the new product that you want to showcase in your presentation. It can be real or fictitious (based on an industry). This is for background purposes only. The presentation is to showcase your abilities and what you can contribute to the organization.

IBIS World and BizStats have estimates of cost of good sold and some other categories of operating expenses. Information about contribution margins are not available, but adding new products typically mean incurring both fixed and variable costs. Consequently, cost of good sold is a reasonable estimate. Net operating income as a percentage of sales or some variation thereof may also be relevant if the new product is expected to contribute significantly to the bottom line. As a candidate for a position you would not have internal information available, but being resourceful and being a skilled researcher are desired traits for the position. IBIS World also have a wealth of other market statistics that may be helpful. Use listed background material and other resources as needed.

Requirements:

There are four parts. Each part must include a word document which cannot exceed two pages. Use words, tables, and graphs to make a succinct presentation. Document all sources and provide links at the end.

PART 1

Include the following items in your paper.

Present an idea for a new product.

Describe the product.

Show some cost estimates and pricing suggestion for this product based on research. 

What approach would you use to determine selling price (for example cost plus or target costing)? It is important when choosing a design.

Explain your rationale for the pricing approach.

Show expectations of growth and potential profit.

PART 2

Include the following items in your paper. 

What about special pricing for some markets or customers?

Show effect on revenues and profitability based on stated assumptions.

Potential advantages and disadvantages, both financial and non-financial.

What are the relevant costs to consider?

PART 3

Include the following items in your paper. 

The organization is currently centralized, but is reviewing options to put a decentralized structure in place.

You are asked to comment on responsibility centers and their functions.

Cost centers can be a drain on an organization. Do you have any thoughts about limiting the number of cost centers and control costs? Present specific ideas.

PART 4

Include the following items in your paper.

Performance measures. It is important to measure success of the organization and its managers.

Suggest performance measures for

divisions, product lines, etc.

managers

Comment on the measures selected and explain how they foster goal congruence for the organization and employees.