2. The target return under the ABC cost method, the lion king meets the required return of 10% and beats it by 3.61%, however, the flintstone product fails to meet this goal by 3.32%, it only has a return of 6.68%. 3. We decided to use the ABC numbers because they were much more accurate and reasonable when compared to the step method. The step method provides a profit margin for the flintstones that is many times greater than the profit margin provided by ABC costing, it is more reasonable to assume that the profit margin would not be as optimistic. 4. First off, we are assuming that the costs are directly correlated to drivers in that if the amount of inspections were to increase (or decrease) the costs associated with that driver would increase (or decrease) by the set variable amount. We would suggest that guys and dolls takes a look at the inefficiencies in the moving of the Flintstone’s products materials, it takes 5 times as many moves to finish a Flintstones product as it does to finish the lion king products. It would be much more efficient to
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This note was uploaded on 09/08/2010 for the course BUS 170 at San Jose State.