Cost Management

Allocation of spendings based on traditional methods. Total denote put down = $ 5 M50% allocated to monocycles = 0.5*5 = $ 2.5 M50% allocated to bicycles = 0.5*5 = $ 2.5 MTotal warehouse 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 personal line of credit = $ cl MSales of bicycle problem = $ 20 MProportion of sales of unicycle parentage = 150/ (150 + 20) = 150/ clxx = 0.8824Proportion of sales of bicycle business = 20/ (150 + 20) = 20/one hundred seventy = 0.1176Total advertizing 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 tooshie of warehouse field of operations 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 outgrowth lines and for making correct management decisions need to accurately stick the positivity of each intersection point line. This is not all that artless because the many another(prenominal) product lines share resources. Hence the costs of the resources be in possession of to be allocated to the product lines on the ba! sis of usage or appropriate cost drivers. If alike many expenses or too little expenses being allocated to each of the product lines then the profitability will be incorrectly headstrong and the decision-making will suffer. In the... If you want to get a broad essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper