Case solution has a team of experts who are knowledgeable and experienced in the field of writing. Its changes and effects on company. In which all overhead is solely allocated as a percentage of the direct labor cost the overhead rate , In this case 439%. When expenses incurred of a number of products, they are gathered and allocated based on a proper cost driver. Case Study Solution Destin Brass was established in 1984 and have grown to produce valves, pumps and flow controllers. Some minor deviations from the correct cost per unit are possible since the overhead percentages of the packing and shipping given in Exhibit 5 are rounded off and sum up to 99% instead of 100%. Before implementing this price increase, I would be up front with the customers to let them know why there is another price increase.
In general, the distribution of gross margin between different products has changed. What are the strategic implications of your analysis? These can be computed at standard and are unambiguously associated with each product. Two volume-based systems are described and illustrated. The firm utilized standard unit strategy to by apportioning the altered expenses among the three items utilizing run work hours. If Destin has formed collaborative relationships with. Scott was known for his ability to create high-quality brass boat fittings for the fishing industry.
Once the alternatives have been generated, student should evaluate the options and select the appropriate and viable solution for the company. There is need to further increase prices of Flow Controller. Case Study Help Analysis With Solution Online Students may get confused while writing an assignment on this subject as they are unaware of the expectations a professor has and the important areas where they need to focus. There is also a supplemental spreadsheet that you should download to work from. Kindly ensure that our email id assignmentconsultancy.
The firm utilized standard unit strategy to by dispensing the settled expenses among the three items utilizing run work hours. But, making a decision following the standard costing method would have caused disastrous consequences for the company as it would cut the profitable product and concentrate on products that are selling at a loss. The subsequent table highlights only the most significant changes in overhead cost allocation. After recognizing the overhead activities, costs of overhead resources used for the activities are allocated to the activities using cost drivers. In any case, John Scott, the assembling chief, brought up that, as per this technique, the valve appears to be costlier and stream controller appear to be more productive than they really are. Different cases has different requirements and so as the structure. The scope of the recommendations will be limited to the particular unit but you have to take care of the fact that your recommendations are don't directly contradict the company's overall strategy.
Case Study Solution Once you have developed multipronged approach and work out various suggestions based on the strategic tools. Another method used to evaluate the alternatives are the list of pros and cons of each alternative and one who has more pros than cons and can be workable under organizational constraints. Therefore to select the best alternative, there are many factors that is needed to be kept in mind. The company had set the standard of 35% gross margin and this product was meeting the goals of the company. The challenging diagnosis for Destin Brass Products Co and the management of information is needed to be provided. In Destin Brass case, the company tried to establish a high brand name for producing the valves, but later as an expansion to the business, the company included two new product lines which are the pumps and the flow controllers keeping in mind the similarities of productions and the availability of the productions capacity.
The allocation of overheads is where the differences in costs come under the three costing methods. Guidry was a veteran with a history of successful ventures, and Alford had manufacturing. You can also send us your details through our email id support assignmentconsultancy. Use the Overhead Cost Activity Analysis in Exhibit 5 and other data on manufacturing costs to estimate product costs for values, pumps and flow controllers. All 3 products' unit costs in the new system are different from exhibit 3 and 4. Pest analysis is very important and informative.
Based on your analysis, what actions would you suggest the managers at Destin do? Once you finished the case analysis, time line of the events and other critical details. At the same time, the flow controller market remains seemingly untouched. A meeting was held due to declining profits caused by a lower price Destin was able to charge for pumps and having budgeted pumps sales to account for 55% of company revenues. Hannah Guthy Destin Brass Products Co. What actions would you recommend to managers at Destin Brass Products Company? The high competitiveness of market requires that all types of businesses have a comprehensive understanding to the costs and profits in much detail in order to facilitate decision making process. He proposed movement based costing to decide item cost.
Words: 740 - Pages: 3. In which the total overhead cost is determined by summing the costs of machine depreciation, labor, the. Once refreshed go through the case solution again - improve sentence structures and grammar, double check the numbers provided in your analysis and question your recommendations. Compare the estimated costs you calculate to existing standard unit costs Exhibit 3 and the revisted unit costs Exhibit 4. Destin faces stiff competition in the pump market with no design advantage that would make their pumps more desirable. In a meeting with Destin leadership, that was held to come up with possible suggestions to work around the issue, they realized that competitors are not taking advantage of the opportunity for profit in flow controllers.
Destin Brass was the sole supplier of valves but did not have any specialization in this product. Case Study Help Analysis With Solution. Below lists the product costs using activity based costing, recommendations for adjusting the price of flow controllers, and how these changes in product costing affects net income. Words: 673 - Pages: 3. Managers suspect that cost accounting and cost allocations to products may be to blame. This discrepancy in pricing is due to how overhead is allocated to each product line in the different methods.