Case 2 – Ch 16 through Ch 20

Part 1
The following categories represent typical manufacturing industries: Beverages, Chemicals, Food, Paper Products, Metals,  Pharamaceuticals, Cosmetics, Sports, etc. Use annual reports the Internet, or library resources to complete the following.

Identify one manufacturing company  and determine the following:

 

  1. a) Include Company profile.
  2. b) Typical products manufactured by the selected company, including brand names.
  3. c) Research typical materials used by the selected company for at least one major product and classify them according to the following headings: Direct Materials,  Labor, Overhead and Selling Expenses
  4. d) Describe at least four decision scenarios within the company that would reflect / use managerial accounting concepts. (One example:  breakeven analysis).

 

Exercise 

 

Chapter 19 Break-even sales and cost-volume-profit chart  OBJ. 3, 4

For the coming year, Culpeper Products Inc. anticipates a unit selling price of $150, a unit variable cost of $110, and fixed costs of $800,000.

Instructions

  1. Compute the anticipated break-even sales (units).
  2. Compute the sales (units) required to realize income from operations of $300,000.
  3. Determine the probable income (loss) from operations if sales total 32,000 units

 

Part 3 Ethics Case

A Division of the Company uses absorption costing for profit reporting. The general manager of the Division is concerned about meeting the income objectives of the division. At the beginning of the reporting period, the division had an adequate supply of inventory. The general manager has decided to increase production of goods in the plant in order to allocate fixed manufacturing cost over a greater number of units.

 

Unfortunately, the increased production cannot be sold and will increase the inventory. However, the impact on earnings will be positive because the lower cost per unit will be matched against sales. The general manager has come to you, the controller, to determine exactly how much additional production is required in order to increase net income enough to meet the division’s profit objectives.

 

You analyze the data and determine that the inventory will need to be increased by 40% in order to absorb enough fixed costs and meet the income objective; however, you also determine the increased inventory cannot be sold given existing demand.   Prepare your report regarding your decision to the division manager.

 

Requirements: Apply the Guidelines for Ethical Conduct from Chapter 1 to discuss whether General Manager is acting in an ethical manner.  The following questions should help you identify and sort out the questions to be considered

 

  1. Identify the consequences and its effects on others including answers to the following questions in this sequence:
    a. What parties (stakeholders) may be harmed or benefited?
    b. Whose rights or claims may be violated?
    c. Which specific interests are in conflict?.

 

  1. Consider your obligations and responsibilities to the  various stakeholders. What is the effect of each alternative on the various stakeholders? Which stakeholders are harmed or benefited most?

 

  1. Make a decision that is fair and ethical  to those affected.

 

It may help to research the internet for articles  regarding various thoughts on ethics.  Be sure to provide material references   for material included in your report.

 

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