Identify and analyze the options that the company has to solve their problem

Identify the problem that the leadership team is trying to solve and the stakeholders who are affected by the approach to solve this problem. Be sure to address the challenges of satisfying the expectations of all stakeholder groups. Remember that stakeholders are not the same as stockholders – stockholders are the owners of the company and represent one stakeholder group. If you are not clear about who might be a stakeholder, take a look at Caux Round Table Principles at

Principles

for identification of Key Stakeholders.

identify and analyze the options that the company has to solve their problem. There are always multiple options, so think about different ways to make this decision. Computations are important and helpful, but they need to be relevant to the decision and should be explained. Address the pros and cons of the options that you have identified. Consider the material in the text about costing methods, cost behavior, cost-volume profit model, and the objectives of management accounting models. For example, what happens to costs if sales volumes stay the same, increase, or fall? Will there be increased or unreasonable demands on certain employees? What happens to the company if sales opportunities are missed? There are several important questions.

Write a conclusion to communicate your findings and recommendations. You will be recommending one solution in your conclusion. Explain your proposed solution and support your recommendation by explaining why it is the best approach. It is critical to provide numbers as part of your recommendation – remember the material from class about the cost volume profit model and break-even analysis.

Cost data:

90,000

machine hours

DL hours

no. of inspections850no. of parts

Cost information developed by the accounting department.
Activity Cost Pool	Annual Cost (dollars)	Driver	Annual Driver volume	Cost/unit
Purchasing	175,000	number of orders	800
Materials handling	168,000	number of moves	7,800
Production (cutting, etc)	280,000		DL hours	105,000
Setting up machines	185,000	number of setups		850
Inspecting	1	90,000		no. of inspections	7,200
Inventory control	138,000		no. of parts	16,800
Utilities	250,000	square feet
Total for all activity pools	1,386,000
budgeted	machine hours	100,000
Single OH rate using machine hours
Cost estimate for proposed job	costs traditional OH	costs ABC OH
units to produce	2,400
Direct materials (spec)	325,000
Direct labor	425,000
10,500
17,100
no. of Puchase orders	475
no. of material moves	1,480
no. of machine setups	525
1,600
square feet used	6,200
total OH
total job costs
Cost per unit