Aunt Connie's Cookies

Aunt Connie’s Cookies

Jury L. Kirkendoll

Acct/561

December 02, 2010

Nathaniel Manning

Aunt Connie’s Cookies

Aunt Connie’s cookies center of attention is the making of her lemon -filled and mint cookies. The company was found in 1986 by Connie Rocha. The goal for Aunt Connie’s Cookies is to increase profit. The company’s Chief Executive Officer, Maria Villanueva, needs to determine the best way to make this happen (University of Phoenix, 2010). “The cost accounting system is the most fundamental component of a cost management system. It supports all other cost management system tools and techniques” (Horngren, Sundem, Stratton, Burgstahler, & Schatzberg, 2008, p. 137).

Cost accounting systems are suitable for all companies (Coulthurst, 1999, para. 16). Cost accounting systems use the costs, either direct or indirect, for determining the price of its products (Horngren, 2008). This includes fixed costs in the form of production facilities and equipment, variable costs in the form of raw materials needed to produce, and labor costs associated with production. These are examples of direct costs. The company would need to determine all of the costs associated with its different value- added processes and use that as a major component for setting its prices. These are indirect costs for producing these cookies. Examples of this can be rent paid for production, or the depreciation on the ovens. The unit price must be high enough to cover all of the above expenses, and still provide enough additional income to pay the entrepreneurial fees necessary for any business.

However, in order for the company to set up these systems it must first determine some of the basic components of the business. For Aunt Connie’s Cookies, producing the cookies is the cost object. The key activity is the making of the cookies, and the delivery of these cookies to the customer. The resources used are the ingredients and the labor...