MBA FPX 5010 Assessment 2 Product Pricing Recommendation – Acme Pickle Company
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Assessment Overview:
MBA FPX 5010 Assessment 2: analyzes Acme Pickle Company’s pricing and product decision comparing current product( 9,000 cases at$ 20) with an offer to add 2,000 cases at a lower price. It separates fixed vs. variable costs, computes per- unit costs, compares total profit under both scripts, and recommends conduct that maximizes profit using directorial( internal) going information.
How to Pass MBA FPX 5010 Assessment 2 Product Pricing Recommendation – Acme Pickle Company
- Define the Difference: Start your paper by clearly defining Financial Accounting (external/GAAP) vs. Managerial Accounting (internal/decision-making).
- Separate the Costs: Create two distinct lists. Variable costs move with production (pickles, jars); Fixed costs stay the same (rent, insurance).
- Calculate the “Magic Number”: Find your Variable Cost Per Unit. For Acme, this is $7.33. This is the minimum price you need to cover for any new order.
- Ignore Sunk Costs: When deciding on the extra 2,000 units, remember that the $24,000 in fixed costs is already paid. Don’t let it confuse your “Accept/Reject” logic.
- Check Capacity: Explicitly state that because Acme can produce up to 12,000 units, adding 2,000 units (totaling 11,000) does not require buying new equipment.
- Calculate Incremental Profit: Show the math: $9.50 (new price) – $7.33 (variable cost) = $2.17 profit per new case.
- Compare Total Profit: Present the two scenarios side-by-side (the $90,000 vs. $94,337 you calculated) to prove the company makes more money overall.
- Address the Risks: Mention “Qualitative Factors.” For example: Will the original customers be upset if they find out someone else is getting pickles for $9.50?
- Use Professional Formatting: Use tables (like the ones in your draft) to make your financial data easy for a “leader” (your professor) to read quickly.
- Cite Your Sources: Ensure you use your textbook or the provided Wilkinson link to support your definitions of fixed and variable costs.
Sample Assessment:
Financial vs. Managerial Accounting
Financial Accounting
A fiscal account provides a broad view of an association’s fiscal position as a whole. It’s primarily intended for external stakeholders, such as shareholders, investors, and banks, who use this information for decision- making purposes, including loan blessings. The reports generated can be on a daily, yearly, daily, or periodic basis. These reports must adhere to Generally Accepted Accounting Principles( GAAP) and the norms set by the Financial Accounting Norms Board( FASB).
Managerial Accounting
In discrepancy, the directorial account focuses on the internal aspects of an association, frequently zooming in on specific operating units within the company( Marshall, McManus, & Viele, 2017). The information deduced from the directorial account is used by the internal labor force to make opinions regarding product and functional processes. Reports in this field can also be generated daily, daily, yearly, or annually but are n’t bound by any standardized reporting guidelines.
Acme Pickle Company: Production Analysis
Acme Pickle Company presently produces 9,000 units, each sold at$ 20.00. The cost per unit is calculated at$ 10.00. Acme is considering an offer to produce fresh 2,000 units at a significantly lower price. Especially, the company has the capacity to increase product to 12,000 units without taking fresh outfit or labor force. Still, the company presently does n’t separate between fixed and variable costs when determining profit perimeters.
Variable vs. Fixed Costs
MBA FPX 5010 Assessment 2: Variable Costs
Variable costs change directly with the position of product( Wilkinson, 2013). For Acme Pickle Company, these include cucumbers, spices, ginger, jars, lids, and direct labor, which is paid on a per- case basis.
Fixed Costs
In discrepancy, fixed costs remain constant anyhow of the product volume( Wilkinson, 2013). Acme’s fixed costs include line administrators’ hires, plant deprecation, property levies, and insurance.
Total Production Cost: 9,000 Units
| Variable Cost
Cucumbers: $15,000.00 |
Fixed Cost
Line supervisors: $10,000.00 |
| Spices/Vinegar: $11,000.00 | Depreciation on factory: $10,000.00 |
| Jars/Lids: $10,000.00 | Property taxes: $3,000.00 |
| Direct Labor: $30,000.00 | Insurance on factory: $1,000.00 |
| Total: $66,000.00 | Total: $24,000.00 |
| Grand Total: $90,000.00 |
- Variable cost per case: $66,000 ÷ 9,000 = $7.33 per case
- Total production cost per case: $90,000 ÷ 9,000 = $10.00 per case
Cost Comparison: 9,000 vs. 11,000 Cases
| Cost Category | Variable Cost per Case | Fixed Cost per Case |
| Cucumbers | 1.667 | |
| Spices/Vinegar | 1.222 | |
| Jars/Lids | 1.111 | |
| Direct Labor | 3.333 | |
| Total Variable Cost | 7.333 | 2.666 |
| Total Fixed Cost | 9.999 |
- Cost to produce 9,000 cases: $66,000 (variable) + $24,000 (fixed) = $90,000
- Cost to produce 11,000 cases: $80,663 (variable) + $24,000 (fixed) = $104,663
Profit Analysis: 9,000 vs. 11,000 Cases
| Profit Category | 9,000 Cases | 11,000 Cases |
| Sales Revenue (9,000 cases) | $180,000 | $180,000 |
| Additional Revenue (2,000 cases @ $9.50) | $19,000 | |
| Total Revenue | $180,000 | $199,000 |
| Total Cost | $90,000 | $104,663 |
| Profit | $90,000 | $94,337 |
Plan of Action
The ultimate thing for Acme Pickle Company is to maximize profit. A directorial account will play a pivotal part in relating the fiscal targets and making informed functional opinions to achieve asked issues in the fiscal account.
References (APA 7 Format)
- Marshall, D., McManus, W., & Viele, D. (2017). Accounting: What the numbers mean (11th ed.). New York, NY: McGraw-Hill Education. https://stattrek.com/statistics/charts/histogram.aspx
- Wilkinson, J. (2013). Variable vs Fixed Costs Definition. Retrieved July 12, 2018, from https://strategiccfo.com/variable-vs-fixed-cost/
Rubric Breakdown
| Performance Category | Needs Improvement | Proficient | Distinguished |
| Cost Classification | Fails to distinguish between fixed and variable costs. | Correctly identifies most costs as fixed or variable. | Clearly explains the logic for every cost classification with no errors. |
| Financial Calculations | Math errors in per-unit or total cost calculations. | Calculates total and incremental costs accurately. | Provides a detailed breakdown of 9k vs. 11k units with zero errors. |
| Incremental Analysis | Does not compare the change in profit between scenarios. | Compares total profit for both production levels. | Clearly demonstrates how the $9.50 price exceeds the variable cost of $7.33. |
| Managerial Recommendation | Recommendation is vague or not supported by data. | Recommends accepting/rejecting based on profit. | Provides a recommendation including both financial and non-financial factors. |
Step-by-Step Guide
- State the decision & data — current volume( 9,000), dealing price($ 20), redundant offer( 2,000 at$ 9.50), and listed costs.
- Classify costs — resolve each cost into variable( cucumbers, spices, jars, direct labor) and fixed( administrators, deprecation, levies, insurance).
- cipher summations — sum variable and fixed costs, cipher variable cost per case and total cost per case.
- Model the volition calculate costs and profit with the fresh 2,000 cases( variable costs increase; fixed costs stay the same).
- Compare profitability — cipher total profit, total cost, and profit for both 9,000 and 11,000 case scripts.
- Interpret results — estimate whether the incremental price covers incremental( variable) cost and increases overall profit.
- Recommend action — accept the incremental order if incremental profit> incremental variable cost and it raises total profit( and no retired capacity/ quality/ strategic issues).
- Note limitations — check fornon-financial constraints( capacity operation, quality, long- term price prospects) and confirm cost allocations before final decision.
Frequently Asked Questions
Q Should Acme accept the 2,000- case order at$ 9.50?
Yea — because the redundant profit($ 19,000) exceeds the fresh variable cost, raising total profit from$ 90,000 to$ 94,337 in the handed computation.
Q What’s the crucial test for an incremental order?
Compare incremental profit to incremental variable cost.However, it generally makes sense, If profit> variable cost and capacity exists.
Q Do fixed costs matter for this decision?
Only for long- term planning. For a one- time or short- term incremental order, fixed costs are sunk and do n’t change the accept/ reject decision.
Q What if costs are misclassified?
Reclassify and count — misclassifying fixed as variable( or vice versa) can flip the decision. corroborate cost motorists before finishing.
Q Anynon-financial factors to consider?
Yea — product quality, client connections, unborn pricing prospects, capacity wear and tear, and occasion cost of using capacity for other orders.
Q Quick perceptivity check to run?
Recalculate profit assuming( a) a 10 advanced variable cost and( b) a 10 lower fresh price to see how robust the decision is.
Integrity Note
Note: Only use this assessment example for learning and structure purpose. Do not submit as your own work.
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