Learning Goal: I'm working on a marketing question and need the explanation and answer to help me learn.
Intro: This portfolio work project will help you to assess a request, complete an analysis to understand the impact on an organization, provide a recommendation, and communicate that recommendation.
Scenerio: The Acme Pickle Company has distributed pickles under the "Florida's Best" brand for eight years from its production facility in Jacksonville, Florida. It sells the pickles to stores in the southeastern United States. Acme normally produces between 8,000 and 10,000 cases of pickles a month but has the capacity to produce 12,000 cases without adding equipment or personnel.
The owner of a twenty-store supermarket chain in Wisconsin, called Super Deals, visits friends in Florida and is impressed with the quality of "Florida's Best" pickles. He approaches you, an Acme Pickle account manager, with an offer to buy 2,000 cases of pickles to use in a special promotion at his stores. He is thinking of something such as:
"Free jar of Florida's Best pickles with every purchase of forty dollars or morethis month only!"
He offers Acme a price of $9.50 per case, knowing that it is a very substantial discount from the normal selling price of $20 a case. Acme's management is inclined to turn the offer down, because their cost is calculated at $10.00 a case. They believe they would lose money if they sold at $9.50 a case. You, on the other hand, believe that some errors have been made in the cost accounting.
Your role: You are the account manager for Acme Pickles.
Requirements:Your analysis for the Controller and Sales Manager is needed to suggest a different way of calculating the pricing of the pickles that may be lower. As part of your analysis, address the following items:
Explain why some production costs are variable and some are fixed.
Analyze the benefit of recalculating the cost of pickle production.
How would you recalculate it?
What would the result be?
What is the benefit to the company of recalculating the cost?
Analyze how financial accounting of production cost differs from managerial accounting of production cost.
Explain the difference between the two accounting methods.
Identify the benefits and drawbacks of each method.
Recommend a plan of action to management regarding Super Deals offer.
Below is the cost report for a recent month. In this month, Acme produced 9,000 cases and sold them at $20 per case, which is Acme's normal selling price. Nine thousand cases are well beyond Acme's break-even point, enabling Acme to record a substantial profit at the nine-thousand-case level.
Item
Cost
Cucumbers
$15,000
Spices and vinegar
11,000
Jars and lids
10,000
Direct labor, paid by the case
30,000
Line supervisors, on salary
10,000
Depreciation on factory
10,000
Property taxes on factory
3,000
Insurance on factory
1,000
Total Costs:
$90,000
Cost per case (9,000 cases produced) $10.00
Acme Pickle Company Cost Report
Deliverable format:
Your team lead wants to share this analysis across remote locations of the organization and is hoping you will set the standard for how analyses and decisions of this type should be presented and supported. Your team has requested either a recorded presentation (including slides and notes) or a presentation and supporting reporting that can be distributed as a model. Prepare a presentation of at least 9 slides using PowerPoint or software of your choice detailing your recommendation and the information you used to make your recommendation. You can either record the presentation or prepare a separate report supporting the presentation.
If you choose to record your presentation, you may use Capella-supported Kaltura Media or another technology of your choice that produces a shareable URL. Kaltura is recording software that can be used to create webcam, screen, and audio recordings. Refer to the MBA Program Resources for the Using Kaltura tutorial to prepare for this option. If you choose to use something other than Kaltura Media, ensure that it creates a shareable URL and can be embedded in the courseroom to ensure faculty can access your recording.
Note: If you require the use of assistive technology or alternative communication methods to participate in these activities, please contact DisabilityServices@Capella.edu to request accommodations.
Recommendation requirements:
Presentation slides:Create at least 9 slides detailing your recommendation and the information you used to make your recommendation.
Include additional details as slide notes.
Supporting information. Choose one of the following options:Record your presentation.
Create a 23 page report to support your slides.
Related company standards:
The recommendation report is a professional document and should therefore follow the corresponding MBA Academic and Professional Document Guidelines, including single-spaced paragraphs.
In addition to the presentation or report materials, include:Title (slide or page).
References (slide or page).
Appendix with supporting materials.
At least two APA-formatted references.
Evaluation: By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies through corresponding scoring guide criteria:
Competency 1: Explain how accounting concepts and practices impact financial reporting.Explain why some production costs are variable and some are fixed.
Competency 2: Apply principles of accounting to assess financial performance.Analyze how financial accounting of production cost differs from managerial accounting of production cost.
Competency 3: Analyze accounting information to support business decisions.Analyze the benefit of recalculating the cost of pickle production.
Recommend a plan of action to management.
Competency 4: Communicate financial information with multiple stakeholders.Communicate accounting information clearly.
Faculty will use the scoring guide to review your deliverable as if they were the Controller or Sales Manager. Along with reviewing the content, they will also review the way you present this content. Review the scoring guide prior to developing and submitting your assessment.
Competencies Measured: By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and scoring guide criteria:
Competency 1: Explain how accounting concepts and practices impact financial reporting.Explain why some production costs are variable and some are fixed.
Competency 2: Apply principles of accounting to assess financial performance.Analyze how financial accounting of production cost differs from managerial accounting of production cost.
Competency 3: Analyze accounting information to support business decisions.Analyze the benefit of recalculating the cost of pickle production.
Recommend a plan of action to management.
Competency 4: Communicate financial information with multiple stakeholders.Communicate accounting information clearly.
Sample Solution
Acme Pickle Company: Super Deals Offer Analysis
Presentation Slides:
Slide 1: Title Slide
Title:Â Evaluating the Super Deals Offer:Â A Cost-Benefit Analysis
Subtitle:Â Acme Pickle Company
Your Name & Date
Slide 2: Introduction
Briefly introduce Acme Pickle Company and its "Florida's Best" brand.
Present the Super Deals offer and the initial concerns regarding profitability.
Highlight your recommendation to recalculate the cost of production.
Slide 3: Cost Breakdown
Present the current cost report with variable and fixed cost classifications.
Explain the concept of variable costs (e.g., cucumbers, direct labor) and their relation to production volume.
Explain the concept of fixed costs (e.g., line supervisors, depreciation) and their independence from production volume.
Slide 4: Recalculating Cost per Case
Propose excluding fixed costs from the cost per case calculation for the Super Deals offer.
Explain the justification: fixed costs are already covered by regular production volume, and the offer is incremental.
Present the recalculated cost per case based on variable costs only (excluding fixed costs).
Full Answer Section
Slide 5: Financial Benefit Analysis
Calculate the profit per case at the offered price ($9.50) and the recalculated cost.
Compare this profit to the profit per case at the regular price ($20) and regular cost ($10).
Highlight the potential profit even with the lower selling price due to variable cost focus.
Slide 6: Managerial vs. Financial Accounting
Briefly explain the differences between managerial and financial accounting:
Managerial:Â Focuses on internal decision-making and cost control.
Financial:Â Focuses on external reporting and adherence to accounting standards.
Emphasize the suitability of a variable cost-focused approach for this specific decision (managerial perspective).
Slide 7: Recommendation for Super Deals Offer
Clearly state your recommendation:Â accept the Super Deals offer based on the profitable outcome of the recalculated cost analysis.
Briefly mention potential benefits beyond profit, such as market expansion and brand awareness.
Slide 8: Conclusion
Summarize the key points: cost recalculation, profit potential, and alignment with managerial accounting principles.
Reiterate your recommendation and its benefits for Acme Pickle Company.
Slide 9: Q&A
Supporting Information:
Option 1: Recorded Presentation:
Record your presentation using Kaltura or another approved software, incorporating the slides and your narration.
Ensure clear explanations, engaging delivery, and professional presentation style.
Option 2: Report:
Create a 2-3 page report summarizing the key points covered in the slides.
Include detailed explanations, calculations, and justifications for your recommendation.
Use clear headings, concise writing, and professional formatting.
Additional Notes:
Include relevant financial statements and calculations in the appendix.
Use at least two APA-formatted references for any external sources used.
Proofread your presentation and report carefully before submission.
By following these guidelines and incorporating your analysis and insights, you can create a compelling presentation or report that effectively supports your recommendation to management.
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