Cost Management

Allocation of spendings based on traditional methods. Total advertizing put down = $ 5 M50% allocated to monocycles = 0.5*5 = $ 2.5 M50% allocated to bicycles = 0.5*5 = $ 2.5 MTotal store expense = $ 3 M50% allocated to unicycles = 0.5*3 = $ 1.5 M50% allocated to bicycles = 0.5*3 = $ 1.5 MRecommended allocation of expensesAdvertising expenses should be allocated on the root word of salesSales of unicycle care = $ one hundred fifty MSales of bicycle crinkle = $ 20 MProportion of sales of unicycle cable = 150/ (150 + 20) = 150/ clxx = 0.8824Proportion of sales of bicycle business = 20/ (150 + 20) = 20/one hundred seventy = 0.1176Total advertizement expense = $ 5 M88.24% allocated to unicycles = 0.8824*5 = $ 4.41 M11.76% allocated to bicycles = 0.1176*5 = $ 0.59 MWarehouse expenses should be allocated on the rear of warehouse domain usedWarehouse area of unicycle business = 75,000 agora feetWarehouse area of bicycle business = 25,000 square feetProportion of warehouse area of unicycle business= 75000/ (75000 + 25000) = 75000/100000 = 0.75Proportion of warehouse area of bicycle business= 25000/ (75000 + 25000) = 25000/100000 = 0.25Total warehouse expense = $ 3 M75% allocated to unicycles = 0.75*3 = $ 2.25 M25% allocated to bicycles = 0.25*3 = $ 0.

75 MToday businesses run several attach lines and for making correct management decisions need to accurately dictate the positivity of each intersection line. This is not all that unreserved because the numerous product lines share resources. Hence the costs of the resources be in possession of to be allocated to the product lines on t he basis of usage or appropriate cost driver! s. If alike many expenses or too little expenses being allocated to each of the product lines then the profitability will be incorrectly ascertain and the decision-making will suffer. In the... If you want to get a full phase of the moon essay, order it on our website: OrderCustomPaper.com

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