Question

1.Briefly describe an organization with which you are familiar. Describe a situation when a manager in...

1.Briefly describe an organization with which you are familiar. Describe a situation when a manager in that organization could use cost behavior information and how the manager could use the information

0 0
Add a comment Improve this question Transcribed image text
Answer #1

An organization that I am familiar with is Cadbury's , the chocolate maker. They are primarily in to manufacturing of chocolates, candies and other confectionary. The company is considering increasing the price of one of its best selling product, the Hollow due to increase in fixed costs. The cost behavior is important in analyzing if the company will benefit from increasing the price or it must remain as is. In a cost behavior analysis the costs are divided in fixed and variable costs. The primary consideration that the organization must consider the additional contribution i.e. sales less the variable costs that will be generated from increasing the selling price. The additional contribution must be enough to recover the additional fixed costs. In case the selling price does not compensate the increase in fixed prices, the manager must look for alternatives such as reduction in variable costs or increasing production to have economies of scale. Variable costs can be reduced to increase contribution ratio by having better negotiations with suppliers to reduce direct materials price or reduce the labor rate per hour.

Add a comment
Know the answer?
Add Answer to:
1.Briefly describe an organization with which you are familiar. Describe a situation when a manager in...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT