Cost Management

Allocation of spendings based on traditional methods. Total advertizement 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 telephone line = $ cl MSales of bicycle craft = $ 20 MProportion of sales of unicycle championship = 150/ (150 + 20) = 150/ clxx = 0.8824Proportion of sales of bicycle business = 20/ (150 + 20) = 20/one hundred seventy = 0.1176Total advert 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 grounding of warehouse subject field usedWarehouse area of unicycle business = 75,000 agora feetWarehouse area of bicycle business = 25,000 square feetProportion of warehous e 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 step-up lines and for making correct management decisions need to accurately make up ones mind the positivity of each harvesting line. This is not all that unbiased because the legion(predicate) product lines share resources. Hence the costs of the resources be in possession of to be allocated t o the product lines on the basis 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 intractable and the decision-making will suffer. In the... If you want to get a spacious essay, order it on our website: OrderCustomPaper.com

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