Share
Explore BrainMass

Cost Accounting Systems: What are the different costing systems available to Trudeau Organic Orchards?

Subject:
Business, Accounting/Business Analysis/Financial Reporting - Year 4

Description:
Cost Accounting Systems: Explore the different costing systems available too.

Problem 1:
Discuss how the development of a costing system and budget applies to Trudeau Organic Orchards (TOO).

Include in your answer:
Definition of an integrated cost management system.
Scope of an integrated cost management system.
Goals of an integrated cost management system.
Three items that affect the design of an integrated cost management system for TOO.

Problem 2:
Explore the different costing systems available to TOO. Then, compare TOO to two other similar companies.

Include in your answer:
- Information on two different costing systems
o What are the differences between systems?
o When and why would each be used?
o How does this relate to TOO?
- Information on two companies in the juice industry
o Which firm has the better operating performance?
o What criteria were used to make this determination?

Attachments

Solution Preview

Problem 1:
Discuss how the development of a costing system and budget applies to Trudeau Organic Orchards (TOO).

Include in your answer:
1. Definition of an integrated cost management system.
An integrated cost management system connects the use of resources (activities) and costs into a connected system that provides feedback about what activities and products cost, what activity is going on in operations and the field, and that information feeds directly into management control reports, decision-criteria reports, and financial statements. Managements systems are not run in isolation and with conflicting messages about what is going well and what is not. An integrated system means you capture the full organization's activity and monitor all your objectives with one system that reaches to all areas.

- Scope of an integrated cost management system.
The scope of the integrated cost management system would include product costing, overhead allocation, business overhead allocated to cost centers, customer profitability, segment profitability, budgeting and forecasting, and other areas of strategic interest. The system would permit the monitoring and feedback on operations, customer initiatives, learning and growth initiatives and financial results of all of these critical success factors. In addition, it would include activity on management of business processes and financial reporting.

- Goals of an integrated cost management system.
The goals of an integrated cost management system are to monitor controls and variations from budget, understand the cost of activities, analyze the cost of products (both standard and actual), and study the costs of initiatives and resource use by product, division, customer group or other cost object of interest. The idea is to have a full view of the activities and the cost of those activities firm-wide, without the need for local and redundant systems for tracking special goals or projects. By having this data available, firms can monitor their progress towards the critical success factors in all areas of the business-from learning and growth initiatives to internal business processes to customer service and loyalty programs to financial outcomes-so that deviations can be identified quickly and by the relevant managers. This permits firms to quickly solve troubles and replicate successes firm-wide. Also, an integrated system will permit firms to see how activity in one area (like quality) may impact others (like calls to the service center or warranties). This quality feedback also helps firms to reward activity that benefits the critical success factors and not focus only on narrow measures of success that may sub-optimized one area ...

Solution Summary

Your tutorial is 1300+ words plus an analysis in Excel (click in cells to see computation) that compares Trudeau Organic Orchards (TOO) to two juice firms (SkyPeople Fruit Juice, Inc. (SPU) and China Nutrifruit Group Limited (CNGL) - links are given to their financial data in www.yahoo.com). The analysis includes studying gross margin, operating margin, return on assets and return on equity. A comment is made about why other analyses are not possible.

$2.19