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job order and process cost system

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1. In your opinion, what process should a cost accountant follow in order to determine the prices that are best for her company? Give a specific plan. In addition, give an example and citations to support your response.

2. What happens when company costs are not properly determined? Give an example of a company that has suffered, in the past five years, because company costs exceeded company profitability? What should the company cost accountants have done to prevent this loss? Give an example and citations to support your response.

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1. In your opinion, what process should a cost accountant follow in order to determine the prices that are best for her company? Give a specific plan. In addition, give an example and citations to support your response.

The best way to set prices is using a target costing approach. This starts with what the market is willing to pay for a product with certain features and then back out the required profit margin to figure out what the firm can spend to produce it.

So, if you think you can sell a blackberry for $200 and you want a 50% profit margin, you need to produce it for $100. Firms that can't do this, typically just drop the idea and move on to another ...

Solution Summary

Your tutorial is 325 words plus two references and discusses the best costing strategy and a bankruptcy that resulted from costs not being properly understood.

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Financial Accounting Analysis

** Please see the attached file for the requisite financial statements **

SAC has developed revolutionary manufacturing techniques utilizing its new spark plug manufacturing technology to offer special-order spark plugs for the auto racing industry. The company is currently using process costing for its spark plugs but is considering using job order costing for the new specialty spark plugs. How does job order costing differ from process costing? Should SAC use process or job order costing for the specialty spark plugs? Make a recommendation for SAC. Be sure to fully back up your recommendation.

Scenario:
The Sparklin Automotive Company (SAC) has been in business since 1930. It began business in the United States supplying spark plugs to automotive manufacturers (OEM, the original equipment market) and the automotive aftermarket.

SAC has introduced a new spark plug manufacturing process in the United States that produces a higher quality spark plug guaranteed to last 100,000 miles. The introduction of this spark plug has been very successful in the United States.

In addition to these types of projects, your responsibilities include creating and analyzing the monthly performance of each plant and consolidating the results into a set of financial statements footnoted with explanations.

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