They decided to expand to Red and Purple ink pens. It Companu only when an activity-based cost model is adopted does the underlying problem of margins comes to the forefront. Pricing Due to tough global competition, the company needs to decide the pricing of the products accordingly. Internal Processes Operational inefficiency in scheduling and Calssic activities are contributing to higher costs as per calculations. Recommendation Increase prices of the Red and Purple pens to 2.

Thus, overall profit margin increases to It is currently low due to order-drive production method which could be changed to produce-and-sell method. However, inventory holding cost needs to be accounted for. Eg: For Purple pens, the production run could be brought down from 12 to 1 run to produce pens bringing down production costs for these pens.

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Uploaded by mayur Document Information click to expand document information Compamy Cost accounting case, Classic Pen, Job Classic Pen Company Case, Activity based costing. Date uploaded Nov 14, Did you find this Clssic useful? Is this content inappropriate? Report this Document. Flag for inappropriate content. Download Now. Related titles. Carousel Previous Carousel Next. Jump to Page. Search inside Compaby. Alee Di Vaio. Sambit Dash. Madhur Bangur. Gaurav Kataria. Suvanjan Ghosh.

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Case classic pen company with extension - SlideShare

Apr 12, 2012 · Case background• Classic Pen was a low-cost producer of traditional Blue and Black ink pens• Classic Pen had a profit margin of at least 20% of sales• 5 years earlier- introduced Red Pens using same technology at 3% premium• Recently, introduced Purple Pens using same technology at 10% premium. Walnut+ 3.…

Classic Pen Company Case - 4559 Words Bartleby

Apr 25, 2013 · Classic Pen Co. Case In the past Classic Pen Company had been the low-cost producer of black and blue pens and had profit margins over 20% of sales. Over the last five years Pen Co. decided to start producing red and purple pens. They require the same basic production technology but can be sold at 3%...…