Posted: April 7th, 2021
Chapter 6 – The CEO of Pride Company was presented with a graph that depicted the company’s utility cost as semi-variable. The CEO commented that the fixed-cost component does not look right to him. He proceeded by saying, “if the company shut down the plant for six months, the company would not incur half of these costs.” As the cost accountant of the company, what would you tell the CEO? Do you agree or disagree with him? Explain your answer. (300 words) (10 points)
Chapter 7 – The CEO of Pride Company told his managers that they must increasing the unit selling price of their product lower the company’s break-even point. Do you agree with that decision? What is the impact of increasing the selling price to the company’s break-even point? Would the move to raise the unit selling price obviates the company from incurring a loss? (300 words) (10 points)
Chapter 8 – The CEO of Pride Company said that he wants to use variable costing for pricing decisions so it looks good to the board of directors. Why would the use of variable costing may look good to the board of directors? What is the difference between absorption oasting and variable coasting? And if you are the manager, which would you recommend, absorption costing or variable costing. Why? Justify your answer and cite an example. (300 words) (10 points)
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