Making Managerial Decision

To: Senior Management Team
From: Gerald White and Accounting Team
run across:
Subject: A report enlarge an analysis of bes and recommendations for Omar caravanserais prospective sight, any strategic implications of recommendations made and practicable benefits of considering alternative wooing theories and models.

1. Analysis of Costing and Recommendations

1.1 Analysis of Costings below various methods

In Appendices 1, 2, 3 and 4 is a spreadsheet detailing the data for Fast Clean Products current production, absorption costing and marginal costing for current production and the prospective caravan inn order, and division calculations for the prospective order. In this report we ordain be dealing with the average figures as the actual order figures may vary by 2%. The figures for all possibilities can be found in the Appendices.

1.1.1 preoccupancy Costing
The average total cost of the Khan order under absorption costing is £446,107.82.

1.1.2 peripheral Costing
The average cost of the Khan order under marginal costing is £300,000.00.

1.1.3 Contribution Costing
The contribution generated by the order is metrical using various profit loading percentages including 10%, which is soon in use at Fast Clean Products. The contribution at this price is £190,718.



66 but changes with the price set which will be discussed later.

1.2 Suitability of costing methods for the order

In this section, the suitability of for each one costing method, with regard to the management ending as to whether or not take on the Khan special order, is discussed.

1.2.1 Absorption Costing
Absorption costing would be suitable for use as the method includes all cost of production which makes it useful for price decisions. This is important in this case with Khan owning a string of supermarkets which compete intensely on costs.

However, only variable costs are applicable for a special order decision suggesting that marginal costing may be more relevant at the current...If you want to get a full essay, order it on our website: Ordercustompaper.com



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