It would have been more informative if additional background information about the company was provided. Marginal costing, which considers variable costs only, is used to ascertain the contribution of each strategy.
For this to be successful there has to be a spare capacity. However, reorganization of the production process could have been the most favorable strategy because of its potential to make product Z the most profitable among the three products. However, the supervisors may be require further training so that the can manage wider labor force.
This strategy generates a contribution of k as shown below: This strategy needs further analysis without holding any factor constant.
Arthur wanted more time to look into ways of saving costs in the production processes despite the fact that he had failed to try activity based costing that was suggested by Paul during the previous year. In addition, information on the other two products would have been helpful in making comparisons in terms of similar costs.
The information provided is not enough to conduct an accurate analysis. This strategy requires provision of more information to substantiate the claims of the marketing manager. In this case, fixed costs will not be considered since they are already paid; only labour and material costs matters.
In short, many assumptions have been made during these analyses. As tools for elaborating the impact of various strategies, summarized statements, showing the impact of the various strategies on the sales and costs, are clearly presented.
This will enable them to find more effective ways of turning back product Z into a profitable product. It is process oriented and use cost drivers such as number of batches, instead of volume related allocation such as direct labor hours. So, how are these non-financial results incorporated into the financial data?
Dumbellow Ltd should adopt the Activity Based Costing method in order to effectively and efficiently re-organize its processes. Reducing labor supervision is advisable as long as the quality of production is not negatively affected. He thought that there was enough spare capacity to implement this strategy.
In addition, the cheaper component could result in many wastages and defects. For this reason, marginal cost is easier to compute and thus preferable for quick decision making.
It is expected that lower prices would stimulate demand, maximize profits or increase the market share.
In this report, non-financial impacts are not captured and thus more information and further analyses is required to come up with a better solution on how to deal with product Z.
Such costs include additional labor and increase in overheads.Required Write a report to Dumbellow's Board setting out appropriate calculations and making your recommendation as to which course to follow. Your report should cover the following: a) a discussion of the benefits of marginal costing statements for decision-making when.
Dumbellow Ltd, Hardhat Ltd and Merrion of producing the mail ord Product X Product Y necessary for Tweed Ltd (£) (£) packaging at a cost of £ director considers that in Selling price 6 12 business would remain u Variable costs 2 4 on a selling price of £10 Contribution margin 4 8 undertaken.2 –revenues.
of a view by the marketing 1/5(1). View Essay - accounting individual coursework from FINANCIAL BA at Nilai University. Case study about Dumbellow Ltd BA Name Zhuang Yan (Sabrina).
Required Write a report to Dumbellow’s Board setting out appropriate calculations and making your recommendation as to which course to follow. Your report should cover the following: a) a discussion of the benefits of marginal costing statements for decision-making when.
View Homework Help - dumbellow from FINANCIAL BA at Nilai University. Absorption costing statement Product X Product Y Product Z k k k Sales k units at 15 80k units at 25 k units at. Colin Drury, Management and Cost Accounting - Dumbellow Ltd Dumbellow Ltd Stan Brignall, Aston Business School The Board of Dumbellow Ltd are meeting on the 23rd January to discuss the draft budget for /1.Download