Best Grade Valued Based Controlling MBA Assignment

ii


List of Tables
Table 1: Production cost per unit based on machine hours……………………………….2

Table 2: Final selling price per unit based on machine hours……………………………3

Table 3: Production cost per unit based on direct labor costs……………………………3

Table 4: Final selling price per unit based on direct labor costs…………………………..3

Table 5: Production cost per unit based on direct labor hours…………………………….4

Table 6: Final selling price per unit based on direct labor hours…………………………4

Table 7: Overhead allocation using different allocation rates…………………………….4

Table 8: Final selling price per unit based on different cost center’s allocation rates……5

Table 9: Allocation of variable overhead cost based on ABC costing method…………..5

Table 10: Production cost per unit based on ABC costing method……………………...5

Table 11: Final selling price per unit based on ABC costing method…………………….6

Table 12: Summary Assessment with percentiles………………………………………10

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List of Abbreviations
ABC Activity-Based Costing
CEO Chief Executive Officer
EBIDTA Earnings Before Interest, Depreciation, and Taxes
EBIT Earnings Before Interest and Taxes
EBT Earnings Before Taxes
FIFO First-in-First-out
LCC Life cycle costing
R&D Research & Development

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Table of Content
List of Tables .................................................................................................................... ii
List of Abbreviations ....................................................................................................... iii
1. Introduction .................................................................................................................. 1
1.1. Tasks ...................................................................................................................... 1
1.2. Pricing strategy ...................................................................................................... 2
1.3. Cost centers ............................................................................................................ 2
2. Findings: Different cost allocation methods................................................................. 2
2.1. Plant-wide rate method based on machine hours ................................................... 2
2.2. Plant-wide rate method based on direct labor costs ............................................... 3
2.3. Plant-wide rate method based on direct labor hours .............................................. 3
2.4. Using different allocation rates from cost centers ................................................. 4
2.5. Activity-Based costing (ABC) ............................................................................... 5
3. A look into the future: Life-cycle costing method ....................................................... 6
4. Equivalent units of production ..................................................................................... 6
5. Full-costing vs. Variable costing .................................................................................. 7
6. Profitability margin assessment .................................................................................... 8
7. Break-even-point analysis ............................................................................................ 9
8. Probabilistic cost and external risk analysis with Monte Carlo Simulation@Risk ...... 9
9. Conclusion .................................................................................................................. 10
References ...................................................................................................................... 12
Appendix ........................................................................................................................ 13