Managerial Accounting/ Cost Management Systems

PART ONE Assignment Details This discussion has three parts. When making the determination of whether or not a selling price should be increased there are many different aspects to take into consideration. Paulsen Company sells only one product. The regular selling price is $50. Variable costs are 70% of this selling price, and fixed costs are $7,500 per month. Management decides to increase the selling price from $50 to $55 per unit. Assume that the cost of the product and the fixed operating expenses are not changed by this pricing decision. In a response of 400-600 words answer the following: 1. What cost-volume relationships should Paulsen take into consideration for the original price and the proposed new selling price? 2. Discuss the non-monetary factors that should be taken into consideration before raising a selling price. PART TWO Assignment Details Managing activities across the value chain represents a comprehensive integrated approach to the traditional management functions of planning and control. Eliminating non-value-added activities from the chain is central to this strategic approach to cost management. Smith Corporation is considering the implementation of a JIT inventory system. The company recently analyzed its cycle time to determine the average number of days spent in each activity of its production process. Use the summary of the analysis shown below to answer the included questions in a response of 2-3 pages: