Southern New Hampshire University
Module Three Homework
Respond with short answers in paragraph form.
1) What are the various methods that can be used to analyze distribu on costs? Two Methods that can be used to analyze distribution costs are: > Cost benefit analysis -- this method is a business decision process that is used to decide what decisions must be made and what items they need to sidelined. Using this method, total cost can be subtracted out of the equation, as well as any potential rewards. >Activity based costing -- this method is also known as the ABC method. The assigns both indirect and overhead cost to the related services and products. Also, this method is largely seen in the manufacturing industry.
2) Why is it important for the controller to keep track of distribu on costs? This cost can and should be tracked by the organization's controller. When the controller does track both the decreases and the increases, they forecast a budget that should be fairly accurate for the organization. This makes it easier for the organization to have a budget that they are able to maintain.
3) What steps might a controller take if the distribu on costs of a certain product exceed the actual price the customer was being charged? The first step would be to look to see if any cost could be cut, or cutback be made. This could be done by possible changing vendors, changing storage facilities (if they don't own their own warehouses), or even simply increasing the cost that is being charged to their customers. Another option would be take a meeting with both sales team and executive management team and discuss ways that production cost could be reduced or discuss eliminating the product, providing the organization has additional products that are more profitable for the organization.
4) What is meant by the term "standards" in the context of distribu on costs? Bragg (2011) defines this as the effort, results, or resolution of effort to results. These standards of distribution are used to measure performance and considered to be a general nature. However, because they are considered to be standards, they can used to track trends in the distribution process, which can be further applied to the products, territories, branches, and even departments that are involved in the distribution process.
5) Why is it important to set distribu on standards?
Southern New Hampshire University
This was touched upon in the previous question. However, the reason that these standards are important are because when an organization has a set of standards that it uses, it makes it easier to under any variances they occur within their processes. Once those variances have been identified by organization, they can then take the steps needed in order to correct them (Bragg, 2011)
Once a company has decided to set certain standards, they must maintain and record di erent types of informa on. Please discuss the type of informa on that must be kept track o