ACC8802: Customer Profitability Analysis and Target Costs Approaches - Accounting Assignment Help

Assignment Task:

Description of Assessment 1: 

Your answers to the requirements for the four (4) case studies will form the basis of this individual assessment task. These case studies contain information that will relate to material covered for modules 1, 2 and 3, including week 1 to week 6. 

The purpose for Assessment 1 

The purpose for this assessment is to assess you on (1) your knowledge and understanding of the course content, (2) your application of that knowledge, and (3) your critical analysis of information provided in the four (4) case studies. 

The case studies will be used to assess learning outcomes 1, 2, and 3 listed below. 

1. To demonstrate a theoretical knowledge of the role of strategic management accounting in supporting strategy development and the day-to- day operations of a sustainable organisation 

2. To apply strategic management accounting tools and techniques to improve the contribution and sustainability of value creating activities 

3. To utilise strategic management accounting tools and techniques skills to ensure the role of performance measurement and control systems in value creation is achieved, strategies are implemented and performance monitored and adjusted to improve the success of the strategies. 

Case Study 1: (25 Marks) – Customer Profitability Analysis and Target Costs Approaches 

The Good-sleep Company produces mattresses and sells these to its commercial customers, which are 20 retail outlets. The 20 retail outlets comprise 19 commercial customers which are part of a group of separately owned furniture stores with central purchasing and one (1) large multi-outlet retailer. The central purchasing centre for the 19 independent furniture stores buys 60% of the mattresses produced by Good-sleep Company. Mattresses purchased by central purchasing are distributed to its 19 small commercial customers in approximately equal quantities and their individual orders are about the same size. The remaining 40% of mattresses are purchase by one (1) large multi-outlet retailer. 

REQUIRED: All requirements for case Study 1 must be answered

1. Assign manufacturing, order-filling, and salesforce costs to the two customers groups (large retailer and small retailers) using the sales volume allocation basis 4 marks

2. Calculate the total cost per mattress and profitability of each customer group, using this sales volume driver basis (calculated in 1 above). 2 marks

3. Assign manufacturing, order-filling, and salesforce costs to the two customer groups by using an ABM approach allocation basis. Round activity rates and activity costs to the nearest dollar. 8 marks

4. Calculate the total cost per mattress and the profitability of each customer group using an ABM approach allocation basis 2 marks

5. Compare your answer from requirement 2 and 4. Comment on the accuracy and usefulness of the different cost and profitability per mattress for each customer group for strategic decision-making. 2 marks

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