Variable Manufacturing Cost

Question 1

Continuing the scenario from the Module 3 discussion:

  • Identify and classify the fixed and variable manufacturing costs for producing your product.
  • Describe what contribution margin means and how you would calculate it for your division.
  • What types of decisions could you make using the contribution margin? Give specific examples of how you might use the contribution margin to make decisions about product pricing, acceptance of special orders, increasing or decreasing component costs, or incurring additional advertising expenses.

Be sure to cite any sources using APA style

Question 2

Scenario: Davis Skaros has recently been promoted to production manager. He has just started to receive various managerial reports, including the production cost report you prepared. It showed his department had 2,000 equivalent units in ending inventory. His department has had a history of not keeping enough inventory on hand to meet demand. He has come to you, very angry, and wants to know why you credited him with only 2,000 units when he knows he had at least twice that many on hand.

Prepare a maximum 700-word informal memo and explain to Mr. Skaros why his production cost report showed only 2,000 equivalent units in ending inventory. Using a professional tone, explain to him clearly why your report is accurate.

Question 3

Prepare a maximum 700-word informal memo to management addressing Mary’s suggested changes.

  • Explain whether Mary’s changes should be adopted. Why or why not? Analyze the above information (three bullet points above) and use this information to support your suggestion.

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