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Unformatted text preview: a ho mogeneous way. This is not the case. Inst itutio nal sales use sizably less resources in the cutting area and the packaging area. The percentages o f total costs for each cost category are as fo llo ws: Retail Institutional Total Direct costs Direct materials 90.0% 10.0% 100.0% Packaging 95.7 4.3 100.0 Indirect costs Cleaning 90.0 10.0 100.0 Cutting 93.5 6.5 100.0 Packaging 97.3 2.7 100.0 Units produced 90.0% 10.0% 100.0% Idaho can use the revised cost informat ion for a variet y of purposes: a. Pricing/product emphasis decisions. The sizable drop in the reported cost of potatoes sold in the inst itutional market makes it possible that Idaho was overpricing potato products in this market. It lost the bid for a large inst itutional contract with a bid 30% above the winning bid. Wit h its revised product cost dropping fro m $1.133 to $0.620, Idaho could have bid much lower and st ill made a profit. An increased emphasis on the inst itutional market appears warranted. b. Product desig...
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This note was uploaded on 10/11/2010 for the course ACCT 321 taught by Professor Cole during the Spring '10 term at University of Miami.
- Spring '10
- Cost Accounting