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Case study: R&V Fashion
Required:
Write a report written from the point of view of the management accountant directed to the general manager in which you answer the following questions:
1. Why is R&V Fashion's existing pricing system inadequate for its current operating environment?
2. Develop an activity-based cost system for R&V fashion based on year 2016 data. Calculate the activity cost driver rate for each R&V Fashion activity in 2016. The activities are as follows:Ship cartons; process cartons (we define two different activities, process cartons and ship cartons because they handle different quantities of the activity driver, as 75 000 cartons are shipped via freight and 5 000 cartons are shipped via drop-ship delivery); drop-ship delivery; set-up manual order; enter items ordered (individual order lines in an order); validate EDI order.
3. Using your answers to question 2, calculate the profitability of Customer A and Customer B.
4. What explains any difference in profitability between the two customers?
5. Explain:a. What are the limitation, if any, to the estimates of the profitability of the two customers?b. What are the advantages and the limitations of Activity-based costing?
Attachment:- Case.rar
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This is a 800 words assignment that talks about the Case study of R&V Fashion. R&V Fashion is a distributor of premium men’s and women’s fashion labels to department stores and specialty boutiques throughout Australia and New Zealand. It works closely with suppliers and clients aiming to provide clients with uncomplicated delivery of sought after brands. This offering, coupled with personalized service differentiates the company in a highly competitive market.
In 5 (a) expert has not written enough.. can you get some more information added to that part.. it will be great .. in rest i will add by myself. If u can add some more in 5(a) n send me back it will b great. Thnks
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Only Question 1 & 5 (800 words approx.) Criteria/level Application of management accounting techniques (ABC) for costing and control; (ULO 1; GLO 1) Questions from 1 to 5a of the case study. 10 marks Excellent (Score range 8-10) Very clear, concise and thorough explanation of why existing pricing system is inadequate Correct calculation of activity cost drivers and of customers’ profitability Very clear, concise and thorough explanation and discussion of why there are differences in profitability between customers, limitations of the estimates of the customers’ profitability.
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