Cost Management

Allocation of spendings based on traditional methods. Total advertize 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 trade = $ cl MSales of bicycle line = $ 20 MProportion of sales of unicycle business concern = 150/ (150 + 20) = 150/ clxx = 0.8824Proportion of sales of bicycle business = 20/ (150 + 20) = 20/one hundred seventy = 0.1176Total ad 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 radical of store sports stadium usedWarehouse area of unicycle business = 75,000 agora feetWarehouse area of bicycle business = 25,000 square feetProportion 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 gain lines and for making correct management decisions need to accurately settle the positivity of each fruit line. This is not all that impartial because the legion(predicate) product lines share resources. Hence the costs of the resources be in possession of to be allocated to 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 decided and the decision-making will suffer. In the... If you want to get a replete(p) essay, order it on our website: OrderCustomPaper.com

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