Mendel Paper Co

Mendel Paper Company

While no one can fully control changes or conditions in the marketplace, Mendel Paper Company can focus on ways to improve their increase sales and cost. Cost control discipline remains critical to companies and this discipline enhances their stability. Mendel Paper Company management have shown concern in regards to their company’s variable overhead fixed plant overhead as well as increasing fixed costs. Initiating changes in processes and procedures within their organization is required by management in order to stay competitive in the marketplace. Mendel must think differently about new ways in which they can grow their business.

The company needs to understand cost estimation as well as cost behavior in order to be able to effectively make plans, decisions and control costs. Regardless of what kind of business, costs will be paid regardless of how many products are made and are sold. Schneider states that “fixed cost is a cost that remains constant, regardless of changes in a company’s activity” (Schneider, 2012). The expenses that must be paid no matter how many goods or services that are offered include rent/mortgage as well as insurance. While fixed costs remains constant, variable costs varies. It is noted that “variable costs is a cost that changes in proportion to a change in company’s activity” (Schneider, 2012).

Variable costs include raw materials, electric power to run machines and cost of keeping inventory. Making the necessary changes and adjustments in order to continue their place mat production should start with the variable overhead, fixed plant overhead as well as increasing fixed costs. Initiating a change in processes and procedures within Mendel is a way that the company can remain competitive in the marketplace. Variable overhead changes with the level of activity so Mendel needs to focus on the production process to combat overspending. They need to understand that the profit per item can...