Reference no: EM131191355

MANAGING INTERNAL COST & CONTROLLING FINANCES

Competency 326.1.2: Cost Systems - The graduate utilizes economic cost concepts and activity-based costing (ABC) data to determine and to drive cost-based decisions.

Competency 326.1.3: Profit Planning - The graduate uses cost-volume-profit concepts and applies various analytical tools, such as customer profitability analyses, to improve company profit potential.

Introduction:

Competition Bikes Inc. has retooled and is making both the CarbonLite and the Titanium frame bikes. The company vice president directed that a cost study be conducted, and an activity-based costing analysis was undertaken in one of the company plants. After the study, a breakeven analysis was completed along with target profit projections.

For this task, you will be using the attached "Competition Bikes Inc." storyline.

Task:

Note: Be sure to submit a copy of your Excel workbook when submitting your JET2 Task 4 work. The evaluator will need a copy of your data to ensure correct evaluation.

A. Prepare a summary report to the vice president of the company in which you do the following:

1. Recommend whether the company should change its costing method to activity-based costing.

Note: The discussion should include sufficient financial justification for the recommendation made.

2. Based on an evaluation of cost-volume-profit, do the following:

a. Analyze the breakeven point for Competition Bikes Inc. with regard to sales units and sales dollars for both CarbonLite and Titanium bikes.

b. Prepare a summary report that describes the impacts to the breakeven point if company management needed to increase the cost of direct materials by 10% cost increase and needed to add $50,000 in fixed costs to the production facility.

B. When you use sources, include all in-text citations and references in APA format.

Note: When bulleted points are present in the task prompt, the level of detail or support called for in the rubric refers to those bulleted points.

Note: For definitions of terms commonly used in the rubric, see the Rubric Terms web link included in the Evaluation Procedures section.

Note: When using sources to support ideas and elements in a paper or project, the submission MUST include APA formatted in-text citations with a corresponding reference list for any direct quotes or paraphrasing. It is not necessary to list sources that were consulted if they have not been quoted or paraphrased in the text of the paper or project.

Note: No more than a combined total of 30% of a submission can be directly quoted or closely paraphrased from sources, even if cited correctly. For tips on using APA style, please refer to the APA Handout web link included in the General Instructions section.