Dream Chocolate Company is a small, artisan chocolate maker located in a small town in the countryside. The company is dedicated to producing high-quality, handcrafted chocolates using only the finest ingredients and traditional techniques. As the company has grown and expanded, it has become clear that it is in need of a more efficient and effective costing system. After careful consideration, Dream Chocolate Company has decided to implement a standard cost system as the solution to its costing needs.
A standard cost system involves setting predetermined costs for each product or service offered by the company. These costs are determined based on the materials and labor required to produce the item, as well as any other overhead costs such as utilities or rent. Once these standard costs are set, they are used to track and compare the actual costs of production. Any differences between the standard costs and the actual costs are then recorded and analyzed to identify any areas where the company can improve its efficiency and reduce costs.
There are several reasons why Dream Chocolate Company has chosen a standard cost system as its costing solution. First and foremost, a standard cost system provides a clear and detailed picture of the costs associated with each product or service. This allows the company to better understand the profitability of its various offerings and make informed decisions about pricing and production. Additionally, a standard cost system allows the company to identify areas where it may be able to reduce costs, such as by negotiating lower prices for materials or improving production processes.
Implementing a standard cost system will also require some upfront effort and investment, as the company will need to determine and record the standard costs for each of its products and services. However, this effort will pay off in the long run as the company will be able to more accurately track and analyze its costs, leading to better decision making and improved profitability.
In conclusion, Dream Chocolate Company has made the decision to implement a standard cost system as its costing solution. This system will provide the company with a clear and detailed understanding of its costs, allowing it to better understand the profitability of its products and services and identify opportunities for cost reduction. While implementing a standard cost system will require some upfront effort, the long-term benefits will more than justify the investment.
Dream Chocolate Costing System, Case Study Example
Using the approach es you recommended in Part A and the estimated data provided in Tables 1—5 and the Case, use Excel to compute estimated total cost, profit margin, and margin percentage for each of the four jobs identified in Table 5, Panel A. After completing the case, students should be able to do the following linked to action items in case : Develop Unstructured Problem-Solving Skills 1. For example, it is unable to compute actual costs per order or per bar. Similarly is the Chocolate Barn located in Shaftsbury. Foiling Area After the chocolate is inspected, it is sent to the Foiling Area to be manually foiled. The company also hinted about a second order for 150,000 bars if the first order was successful. Although there are other sizes available, D.
Chocolate Company in Boise, ID
Secondly, job order costing focuses attention primarily on products rather than on departments or activities. Therefore, the employees are required to track all materials and labor used during the job, which will need more accountants to works and creates additional cost for small company. In addition, it also helps to avoid activities and actions that will be harmful for the company in future, including projects and strategies. When asked about the issues D. However, imitation is done in two ways. Write your initial response in 300—500 words. In Part B, they develop and calculate costs based on their recommended approach.
Dream Chocolate Company Case Study Solution and Analysis of Harvard Case Studies
Pros In the case where there are homogenous products, then this kind of costing system is easier to implement. This time, highlighting the important point and mark the necessary information provided in the case. Another advantage is that business owners use process costing because it creates a flexible production process. The company is located in Lancaster, Pennsylvania, and has spread all over the world. Although this is not so prominent for the confectionery industry as of the moment, the trend has a high potential to affect the industry where Adams plays given the nature of the Adams brands i.
Dream chocolate company choosing a costing system solution
The prevalent use of operation costing is cited by Skinner 1978 , and a good example is found in Lee and Jacobs 1993. If deemed necessary, the bars are packed in insulated material with a cold pack to prevent melting. In the Inspection Area, the Master Chocolatier weighs the bars and visually inspects each one for flaws. However, there are two important differences with this case. Demand was increasing in August and September 2010, which are normally weaker months due to fewer special events.
Dream Chocolate Company Case links.lfg.com
We all encounter chocolate in our daily life, and whether we want to admit it or not, chocolate has been a major part of history Milton Hershey And The Hershey Company The Hershey Company is a candy company that makes hundreds of candies. Few, if any, of D. Course Fall 2010 n ¼ 82 Meana 1. Course Fall 2010 n ¼ 82 Meana 1. In the Inspection Area, the Master Chocolatier weighs the bars and visually inspects each one for flaws. There are approximately 40-plus different flavor and size variations of bright stock in storage. Dream Chocolate Company: Choosing a Costing System 641 Issues in Accounting Education Volume 28, No.
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Kay purchased a chocolate factory in Boise and began production in April 2002. Organic chocolate, which comes from a U. The unfamiliar, less-structured format of this case helps students identify case information that is relevant to different costing methods and analyze that information in the context of a specific company situation. Another unique aspect of this case is that it can be effectively used to introduce operation costing to students. Note that each production area incurs costs for supplies each month. This section describes the ingredients, labor, and overhead required to make its bars. In addition to the direct materials cost for these ingredients, there is additional labor required for stirring to achieve equal distribution throughout the bar.
