Sweet Marian is a bakery that provides frozen cakes to retall grocery stores. Sweet Marian produces numerous types of cakes and charges $16.50 per cake, including delivery and regardless of the type of cake Aspecialty cakeline, "Marian's Moist," has been gaining popularity lately because these cakes are so moist they "melt in your mouth." Sweet Marian's accounting system computes the cost of cakes by summing the total of all materials, labor and overhead cost incurred each week and dividing it by the number of cakes produced. SG&A costs are not allocated to the product. Sweet Marian's profit has been decreasing lately. The company has hired you as a consultant to help it determine how to stop their declining profits. You have toured the bakery and noted the following a) The Marian's Molst line of cakes require a quick-freeze process to maintain their moisture. The quick freeze process requires using special 2 equipment that must be precisely calibrated and charged with gasses before each batch of cakes is run through the system. 3 b) Some cakes require extensive hand decorating whereas most require simpleicing c) Sweet Marlan has recently landed a new upscale food chain as a customer. In order to entice the customer, Sweet Marian agreed to stock the cakes on thecustomers display cases in each store as part ofthe delivery service. For other customers Sweet Marian only delivers the cakes to the 4 customer's warehouse 1. Provide an overall critique of the accounting system and how this may relate to the declining profits 6 2. Describe recommendationsad/or any changes you would make to the accounting system for each of the items noted above: a) Quick freeze b) Decorating/lcing c) Stocking/Delivery 4flexible budget cost allocations Sweet Marian is a bakery that provides frozen cakes to retall grocery stores. Sweet Marian produces numerous types of cakes and charges $16.50 per cake, including delivery and regardless of the type of cake Aspecialty cakeline, "Marian's Moist," has been gaining popularity lately because these cakes are so moist they "melt in your mouth." Sweet Marian's accounting system computes the cost of cakes by summing the total of all materials, labor and overhead cost incurred each week and dividing it by the number of cakes produced. SG&A costs are not allocated to the product. Sweet Marian's profit has been decreasing lately. The company has hired you as a consultant to help it determine how to stop their declining profits. You have toured the bakery and noted the following a) The Marian's Molst line of cakes require a quick-freeze process to maintain their moisture. The quick freeze process requires using special 2 equipment that must be precisely calibrated and charged with gasses before each batch of cakes is run through the system. 3 b) Some cakes require extensive hand decorating whereas most require simpleicing c) Sweet Marlan has recently landed a new upscale food chain as a customer. In order to entice the customer, Sweet Marian agreed to stock the cakes on thecustomers display cases in each store as part ofthe delivery service. For other customers Sweet Marian only delivers the cakes to the 4 customer's warehouse 1. Provide an overall critique of the accounting system and how this may relate to the declining profits 6 2. Describe recommendationsad/or any changes you would make to the accounting system for each of the items noted above: a) Quick freeze b) Decorating/lcing c) Stocking/Delivery 4flexible budget cost allocations
