Cost Management

Allocation of spendings based on traditional methods. Total publicizing put down = $ 5 M50% allocated to monocycles = 0.5*5 = $ 2.5 M50% allocated to bicycles = 0.5*5 = $ 2.5 MTotal storage 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 pedigree organization = $ one hundred fifty MSales of bicycle transaction = $ 20 MProportion of sales of unicycle business = 150/ (150 + 20) = 150/ clxx = 0.8824Proportion of sales of bicycle business = 20/ (150 + 20) = 20/one hundred seventy = 0.1176Total denote 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 stem of warehouse world usedWarehouse area of unicycle business = 75,000 agora feetWarehouse area of bicycle business = 25,000 square feet Proportion 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 step-up lines and for making correct management decisions need to accurately tone the positivity of each growth line. This is not all that naive because the some product lines share resources. Hence the costs of the resources be in possession of to be allocated to the produ ct lines on the basis of usage or appropriat! e cost drivers. If alike many expenses or too little expenses being allocated to each of the product lines then the profitability will be incorrectly situated and the decision-making will suffer. In the... If you want to get a safe essay, order it on our website: OrderCustomPaper.com

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