ACC202 management accounting

The company is considering two alternatives to maximize its profit. The first alternative is to continue manufacturing canisters and selling them as before. The second alternative is to buy the canisters from outside and focus on manufacturing cups instead. The calculations show that buying the canisters and focusing on cups would lead to a higher total profit of $700,000 compared to the current approach. However, other factors such as quality control, timely delivery, and after-sales service should also be considered when making this decision.

Provide a concise meta description about the assignment content for SEO in less than 30 words.

Should the Company Accept the Special Order?

The playdough company is considering a special order that will require them to sell 20000 units at 1.4 and the remaining 740000 units at 2.2, which may impact their profit. The company should not accept this offer as it will decrease sales value. Instead, they can consider manufacturing only canisters and dropping coffee cups or purchasing canisters from outside and manufacturing coffee cups. This alternative would increase profitability.

Finance

Should the Playdough Company Accept or Reject the Special Order?

Report

A company is considering a special order that would require it to sell 20,000 units at $1.4 and the remaining 740,000 units at $2.2, which could impact its profit. The company's current production and sales of canisters result in a profit of $532,000 per year. However, producing coffee cups results in a small profit of $60,000. The calculations suggest that the company should not accept the special order as it would incur a terminal loss. Additionally, producing only canisters could lead to an even higher profit. Finally, considering non-financial aspects such as quality, delivery time, and reputation before making a decision is crucial.

Profit Maximization for the Playdough Company

The assignment content discusses the concept of management accounting, specifically focusing on cost recovery and contribution margin. A company's ability to recover fixed costs is reflected in its contribution value, which affects profitability. The article also highlights non-financial factors that should be considered when deciding whether to accept a special order, including winning over competitors, customer loyalty, future prospects, and capacity of production. Ultimately, the decision should balance financial and social responsibilities.

MANAGEMENT ACCOUNTING SOLUTION

This assignment explores the decision-making process involved in accepting a special order. Students are presented with a scenario where a company is offered a lower selling price for a specific quantity of its product.  The assignment requires students to calculate contributions per unit for both normal and special orders, compare profits under different scenarios, and ultimately analyze whether accepting the order is financially viable. Furthermore, it delves into non-financial factors that should be considered when making such decisions, highlighting the importance of long-term benefits, customer relationships, and industry standards.

Special Order Acceptance in Management Accounting

This assignment presents a case study of Playdough Company facing a make-or-buy decision for coffee cups and canisters. Students are tasked with analyzing the cost structure of both options, calculating profit per unit, and recommending the most profitable course of action based on provided financial data. The analysis highlights key factors influencing such decisions, including production costs, quality considerations, and quantity requirements.

Make or Buy Decision Analysis

Playdough Company is considering whether to accept an offer to purchase canisters from another company or manufacture them themselves. The analysis shows that if they avoid fixed costs, their per unit cost would be $1.36, which is lower than the offered price of $1.40. However, the company should also consider other factors such as quality, profit earned compared to other products, and total cost optimization before making a decision.

Should the Company Accept the Special Order?

End of preview

Should the Playdough Company Accept or Reject the Special Order?

Profit Maximization for the Playdough Company

MANAGEMENT ACCOUNTING SOLUTION

Special Order Acceptance in Management Accounting

Make or Buy Decision Analysis

Should Playdough Manufacture or Purchase Canisters?

Should the Company Accept the Special Order?

End of preview

Should the Playdough Company Accept or Reject the Special Order?lg...

Profit Maximization for the Playdough Companylg...

MANAGEMENT ACCOUNTING SOLUTIONlg...

Special Order Acceptance in Management Accountinglg...

Make or Buy Decision Analysislg...

Should Playdough Manufacture or Purchase Canisters?lg...

Should the Playdough Company Accept or Reject the Special Order?

Profit Maximization for the Playdough Company

MANAGEMENT ACCOUNTING SOLUTION

Special Order Acceptance in Management Accounting

Make or Buy Decision Analysis

Should Playdough Manufacture or Purchase Canisters?