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Accounting MGM

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Lava Rock Bicycles, headquartered in San Miguel, California builds bikes for novice to mid-level cyclists, triathletes, and world-class athletes interested in cross-training. Lava Rock is beginning its 6th year of business. It continues to grow its product line and target customer market and it recently became a public company by issuing shares of stock in the NASDAQ exchange.
Each bike is made of a frame, a seat, a set of handlebars, gears & shifting system, brake system, aero bars, 2 wheels, and 2 tires. The selling price varies by model and specific components used to build the bike. Variable costs commonly include:
? component parts, packaging, etc.
? production labor
? sales commissions (percentage or per unit basis)
? other costs allocated on a per unit basis
Lava Rock produces 3 models of bikes (mid-level triathlon (Kona model), entry-level triathlon (Hilo model), and mid-level road cycle (Paris model)). The mid-level models have a greater profit margin but lower sales volume than the popular entry-level triathlon bike. Its bikes are sold directly by Lava Rocks and through independent distributors (typically bike shops and mail-order companies).
Lava Rock Bicycles tries to produce approximately the same number of bicycles it expects to sell in a given period of time. However, it cannot always accurately predict the market. If it manufactures too few cycles, it loses sales. However, because each cycle model improves each year, when Lava Rock Bicycles manufactures too many bikes, it may not be saleable. Lava Rock Bicycles may have to sell its products at a discount or even at a loss to liquidate its inventory. To reduce inventory costs, management is considering implementing a "Just In Time"(JIT) inventory management.
Goals for the next year are to grow the business to other regions, increase profit margin, and expand its product line.

Task 3
Task Type: Discussion Board 2 Date Due: 2/21/2005
Points Possible: 100 Project Duration:
Deliverable Length: 4-6 paragraphs

You are explaining your new role to your friend. After explaining what you do, she expressed surprised about your role. She thought accountants did taxes and just 'did the books' after the real business of the company was over.

Explain to your friend why accounting is a much broader role and the type of positions available to accountants. Use the internet as necessary to explain to her the positions and responsibilities of managerial accountants.


Phase 2 - Costing
Task 1
Task Type: Discussion Board Date Due: 2/28/2005
Points Possible: 100 Project Duration:
Deliverable Length: 4-6 paragraphs

One member of your team emailed you and stated that she believes Lava Rocks should work to convert the fixed costs to variable costs. She wants to know if this is a good idea? Why or why not? If not, then when would it be a good idea. Reply to your friend with the answers to her questions. In your reply, identify the types of costs Lava Rocks would probably incur that are fixed.

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