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Essay / Research Paper Abstract
This 5 page paper looks a case supplied by the student where a firm Mr. Chips is facing demands from a customer to increase deliveries and decrease the price. The paper demonstrates the use of segment accounting in order to assess if the firm should accept the demands. The paper also looks at other factors which may impact of the decision. All calculations are shown. The bibliography cites 3 sources.
Page Count:
5 pages (~225 words per page)
File: TS65_TEMrChips1.doc
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Unformatted sample text from the term paper:
old, followed by the mass grocery outlets with a 0.19 contribution per unit, finally the drug stores with a contribution of 0.11 per unit. However, the mass merchandise buyer is
unhappy and wants to make changes which will increase the costs to the firm. These change, if implemented will impact on the profit as each unit sold will make a
loss. This is true even if the cost of the product is increased. Therefore, it is recommended that the changes are rejected unless there is another reason to accept the
changes, such as the product being a necessary complimentary product to a more profitable good, and is necessary to support other sales. 2. Profitability of Each Segment Activity based costing is
a system that allows the actual costs of the production of a product to be assessed in terms of the actual costs incurred, and resources used. The process of costing
is undertaken deconstructing the civilities used to create or manufacture the product or service, breaking it down so the costs for each product that is output (Cokin, 1996). Therefore, it
is a system that may be best suited to the assessment of costs for any goods that undergo several processes. This can give a cost per unit to the firm
for different products. Segment profitability may be seen as similar to activity based costing, it is the assessment of the profit per segment. In this case there is an
assessment of the individual segments looking at the costs that are incurred for that segment as a whole. In this case delivery costs to all customers in that segment are
assessed a single cost, so there is some aggregating of costs (Cokin, 1996). For Mr Chips to assess the demands being made by Buy 4 Less (including the increased
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