ACCT2002: You have Just been Hired as a Graduate Accountant by Suunto Corporation: Cost Analysis for Decision Making Assignment, Singapore

Assignment Details:

You have just been hired as a graduate accountant by Suunto Corporation, a company that manufactures a variety of electronic products. It specializes in commercial and residential products with moderate to large electric motors. There are three main divisions in Suunto: Cool Sphere (that produces fans), Dry Air (that produces air conditioners), and Hot Space (that produces heaters). All divisions are stand-alone, with a manager responsible for each division, as well as its own administrative functions.

The respective managers are Michael Fowler (Cool Sphere), Shirley Robson (Dry Air), and Gordon Stapleton (Hot Space). The accounting function is centralized, however, each division has an accounts team to help with the preparation of planning and reports. From time to time, an accountant from the main office may be assigned to a division to assist with issues that the division may encounter, and which the accounts team may not have the expertise or experience to handle.

You have been appointed to a graduate position with the central accounting team and have been made aware that from time to time, your job assignation may take you out of the central office into a division. You will be reporting to Maureen Pistana, the Chief Financial Officer of Suunto Corporation.

REQUIRED:

Prepare a report (no more than 10-pages) for Maureen Pistana that addresses the following:

a) for Michael Fowler:

i. The relevant cost of each Retractafan;
ii. The appropriate production/purchase plan; and,
iii. The qualitative factors to consider

b) For Shirley Robson:

i. The break-even point and the number of units of N5 to be sold this year;
ii. The break-even point next year if prices do not change;
iii. The number of units to sell next year to make the same profit as this year; and,
iv. The suggested price so as to maintain the same contribution margin ratio.

c) for Gordon Stapleton:

i. The number of labor hours required to fulfill his department’s requirements for next year;
ii. The ranking of the most profitable product; and,
iii. The appropriate production plan for next year that maximizes income.