Cost Accounting and Management Decisions

Assignment 1: Cost Accounting and Management Decisions

For this assignment I have chosen to discuss the company Gerber. They have a brand that stands out across the nation. Their most popular product is their baby food. Even in this category they have three products that are known across the nation. They make formula (for infants), baby food (for babies that are past infants but not quite a toddler), cookie crackers (for children getting teeth to teach them how to chew) and that is just naming a few. Another great thing about this company is that they don’t just aim toward one certain age group. Obviously their target market is moms, however, they have a wide variety that attracts many different types of customers.

Gerber is a very well known company across the nation. However, many only know it to be one of the leading baby food companies. What people don’t think about is that you see their logo all over baby products. They make pacifiers, sippy cups and baby utensils. They also make clothes (including bibs, pajamas, hats, mittens, etc.), diaper bags, and cloth diapers. These are just a few of the products that this company makes. With a wide variety of products like this, their cost accounting department probably has a field day on figuring out the costs to make each product. If you think about it, the cloth used to make the clothes is not going to take the same amount of time and cost the same to make. The glass jars that they use for their baby food is not going to be the same as the plastic used for the pacifiers.

Cost structure refers to the relative proportion of fixed and variable costs in an organization (Nurre). There are two analysis’ that are typically conducted when it comes to this topic of fixed and variable costs. Conducting a cost-volume-profit analysis is a key step in making decisions as well. This analysis is used to predict the impact on profits of changes in those parameters (Nurre). Conducting a sensitivity analysis, which is an...