Assume that the daytona parts company had the following

Reference no: EM13585664

Developing and Using a Predetermined Overhead Rate: High-Low Cost Estimation

For years, Daytona Parts Company has used an actual plant wide overhead rate and based its prices on cost plus a markup of 25 percent. Recently the marketing manager, Jan Arton, and the production manager, Sue Yount, confronted the controller with a common problem. The marketing manager expressed a concern that Daytona's prices seem to vary widely throughout the year. According to Arton 'It seems irrational to charge higher prices when business is bad and lower prices when business is good. While we get a lot of business during high-volume months because we charge less than our competitors, it is a waste of time to even call on customers during low-volume months because we are raising prices while our competitors are lowering them." Yount also believed that it was "Folly to be so pushed that we have to pay overtime in some months and then lay employees off in others." She commented, "While there are natural variations in customer demand, the accounting system seems to amplify the variation."

Evaluate the arguments presented by Arton and Yount. What suggestions do you have for improving the accounting and pricing procedures?
Assume that the Daytona Parts Company had the following total manufacturing overhead costs and direct labor hours in 2010 and 2011

Reference no: EM13585664

Questions Cloud

Background municipal solid waste msw is all of the garbage : background municipal solid waste msw is all of the garbage refuse trash or junk that gets thrown away from our homes or

The size of shoe a person needs varies linearly with the : the size of shoe a person needs varies linearly with the length of his or her foot.the smallest adult shoe size is size

Ending inventory in the assembly department consists of 900 : ending inventory in the assembly department consists of 900 units which are 30 complete with respect to conversion

Abc and d are partners sharing profits in the ratio of : abc and d are partners sharing profits in the ratio of 3432 . on the retirement of cthe goodwill was valued at

Assume that the daytona parts company had the following : developing and using a predetermined overhead rate high-low cost estimationfor years daytona parts company has used an

The company incurs variable manufacturing costs of 19 per : inman manufacturing company makes a product that it sells for 61 per unit. the company incurs variable manufacturing

Find the best-case and worst-case npvs what is the : 1 assume you are presented with the following mutually exclusive investments whose expected net cash flows are as

The following is an excerpt from a conversation between the : here is the scenario that we are to comment onthis weeku2019s discussion focuses on activity 6-2 located on page 240 of

Two capacitors of capacitance 3c and 5c where c 006 f are : two capacitors of capacitance 3c and 5c where c 0.06 f are connected in series with a resistor of resistance r

User Account

All Pages