DayStar_Desserts[1] - Natalie Simons Accounting 305...

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Natalie Simons Accounting 305 Assignment 28 Westhampton Way University of Richmond, VA 23173 March 24, 2010 CEO John Fernandez Daystar Desserts/ World’s Best Cheesecake 10440 Leadbetter Road Ashland, VA 23005 Dear Mr. Fernandez: I have recently received your inquiry on which costing system will be most efficient for DayStar Desserts in evaluating product costs and I would be more than happy to assist you with this issue. As a small company, I feel it is important that to utilize a costing system that will also be inexpensive for the company to install. Attached is my report where I offer suggestions and give an example of how the costing system I recommend to your company would benefit DayStar. I also analyzed an article about a company who implemented a similar costing system to the one that I am recommending to you and have included that with my report. I believe that this report will be beneficial to your inquiry and I hope you find my recommendations helpful. I have included my contact information so please feel free to contact me with any questions or concerns. I have also neither received nor given any unauthorized assistance during the completion of this assignment. Sincerely, Natalie Simons
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DayStar Desserts 1. SWOT Analysis and Summary SWOT Analysis for Dream Chocolate Internal Strengths Use premium quality ingredients Highly skilled workers Diverse variety of dessert products, sizes and flavors (over 150 types of Cheesecake) Growing company willing to expand and add new products Very effective packaging to minimize damage during delivery Weaknesses Labeling is inefficient and slows down production process Small administrative staff Product costing system does not track labor and overhead costs to individual product lines Small administrative staff External Opportunities New labeling machine will increase efficiency Expansion in 10-inch cake market by increasing distributors Threats Poor economy could hurt sales Large company manufacturing cheesecakes and desserts may enter the market People want to live healthy or lose weight before summer season and avoid buying desserts Positive Negative Daystar Desserts is small to mid - sized company that is rapidly growing in size. Their highly skilled workers and premium quality ingredients make Daystar's products desirable and unique. Sales are on track to increase from $4.2 million in 2009 to $7.5 - $8 million this year. Because sales are almost doubling, Daystar must make sure they increase labor and production capacity to keep up with their sales increase. The four main product lines of Daystar all vary greatly in their required labor; therefore it is important to find a way to better track product costs, especially labor and manufacturing over head. In the current costing system, overhead costs are allocated equally to every unit output. Understanding
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DayStar_Desserts[1] - Natalie Simons Accounting 305...

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