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Team Assignment Part II week 4.docx

Team Assignment Part II week 4.docx - 1 Team Assignment...

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1 Team Assignment, Part 2 Learning Team B: Heather Richardson, Lisa Terry, Wilson Cameron, Chrys Fisher, Jennisha Andrade-Sassone, and Heather McGill ACC/349 Cost Accounting March 19, 2017 Professor Walsh
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2 Team Assignment, Part 2 The results from our analysis of the company’s data helped our team to understand which product is most profitable to the company and the reasons why. Our data will explain why this is true, and will even explain how the type of costing used can skew these results. We will also explain whether we believe Mr. Beridon should cut the sod or the tree portion of his company, if any. The recommendation will explain any other factors or changes that might influence Jeemp Farms and the decision of whether sectors should be cut and the costing method used. Factors that Impact Results When we calculate the product costs for the sod and trees using traditional costing and activity based costing the results are very different. For traditional based costing the profit for each tree sold is $8.51 and for each unit of sod it is $0.21. When activity based costing is used the profit per tree is a loss of $0.28 and per unit of sod the profit is $0.26. These numbers are very different, but it is for good reason. Traditional costing does not account for the true costs of the product. Traditional costing assigns all manufacturing costs to products, and determines that amount by direct-labor hours (Garrisson, Noreen, & Brewer, 2015). This may sound like a fair way of calculating costs, but it can be very misleading. While
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