Submitted by: Submitted by lmark
Views: 547
Words: 702
Pages: 3
Category: Business and Industry
Date Submitted: 12/27/2010 12:08 PM
Aunt Connie's Cookie Simulation
In a business, money is the largest factor to whether or not the company succeeds. All businesses sell some sort of product or service and the price of the product contributes to how much profit the company makes in a given period. One way to ensure a company maximizes profit is to make certain the product is priced correctly. Operating a successful accounting system within the company can help ensure profit maximization. This holds true for Aunt Connie’s Cookie Company (University of Phoenix, 2010). Recommendations about how Aunt Connie’s Cookie Company can use a cost accounting system to help determine the price of the company’s product will be provided to the company’s owner Maria Villanueva to help maximize profits.
Because money is so important to the success of a business, it is pertinent that Maria Villanueva has a basic understanding of the cost accounting system. A cost accounting system is a part of the cost management system that measures cost for management decision-making and financial reporting (Horngren, T, Sundem, G, Stratton, W, Burgstahler, D, and Schatzberg, J. 2008). All employees should have an understanding of the accounting system because it helps with predicting the company’s future sales and expenses. Everything from advertising to production costs and inventory is part of the accounting system. The costs of those three areas help contribute to the price of the product.
To maximize profitability management needs to compare the price of the cookies sold to the amount of money it costs to make the cookie itself. Labor, materials, and equipment all contribute to the price of the resources needed to supply the product (Horngren et al., 2008). After the cost of all the resources is determined, Maria Villanueva will be able to compare the labor costs to the price of the cookies. Because Aunt Connie’s Cookie Company produces, more than one type of cookie Maria Villanueva needs to ensure the labor...