Essay About Overhead Costs And Honest Business Practices

Redeemer Consulting Llc
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Executive SummaryIntroduction Redeemer Consulting LLC, a Mindstorm Strategic Consulting Company, is a Christian based accounting firm that strives to provide strategic guidance to your firm based on financial accounting information for better management decision making. We have a time-honored passion and commitment to honest business practices, and aim to ethically provide the best service to clients, as well as supply results. Honesty and integrity are in the heart of our core values. We are business that makes other business successful.Reynolds Printing had agreed to complete three sets of wedding invitations for a discounted price. The printing was split into three separate runs of May, June, and July. Each job consisted of 500 announcements to be completed in their respective months. While the overhead costs remained the same for all 3 months, the direct labor did not. This caused an increase in total job cost between months. Job 115 May 10Job 116June 10Job 117July 10Cost of Direct Materials$250.00$250.00$250.00Cost of Direct Labor (5 hours)25.0025.0025.00Cost of Overhead (OH)200.00400.00400.00Total Cost (Labor + Material + OH)$475.00$675.00$675.00Total Price (Cost + 25% Profit)$593.75$843.75$843.75Number of Announcements500500500Reynolds printing uses an actual-job costing system. A breakdown of Jobs is listed below(Work Citied: (“Managerial Accounting: The Cornerstone of Business Decision Making”, 2017, p. 210, Case 4-66 Overhead Assignment: Actual and Normal Activity Compared)Problem & SolutionsIn this case, Mrs. Lucky got the bill for all 3 jobs and was angry when she read that the jobs were not equally priced. Mrs. Lucky does not understand how the price is allocated and needs explaining of an actual cost system. The different between Mrs. Lucky being a happy customer or not is dependent on her understanding of costing.