Superior Sanitiser is manufacturer and supplier of hand sanitisers. Due to the corona virus health crises there
Question:
Superior Sanitiser is manufacturer and supplier of hand sanitisers. Due to the corona virus health crises there is a great demand for their products in the current marketplace. The glass bottles are produced in the bottle division, and then transferred to the liquid division, where they are filled with sanitiser liquid.
The company’s best-selling product is ‘Kenkey Hand Sanitiser’. The standard cost of the bottle of Kenkey is shown in the following table:
Bottle division | Liquid division | |
Direct material | $10 | $20 |
Direct labour | $20 | $10 |
Variable Overhead | $25 | $32 |
Total standard cost | $68 | $80 |
Bottle division can also sell the bottles directly to glass bottle wholesalers. The sales price for a unit of bottles is $85. The liquid division sells its finished product for $6.00.
Explain how can management team of Superior Sanitiser use target costing to reduce costs and plan profits
At Superior Sanitiser, managers of profit centres and investment centres have considerable autonomy in deciding whether to accept or reject orders for goods or services, and whether to source their materials and components, or services, from inside or outside the organization. They also have considerable autonomy over setting and accepting transfer prices. Describe the difference between market-based and cost-based pricing that managers of Superior Sanitiser, might choose to use?
Some argue that control is the essential management process that everything else hangs off. Why is control such an important part of management accounting systems? Or is it not really the central function of organisations? While discussing, write arguments for and against?
Accounting Principles
ISBN: 978-0470534793
10th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso