Reference no: EM132459704

REQUIREMENTS:

Problem 1. Production Report Analysis: Prepare production reports under the weighted average as well as the FIFO method. What is the cost per bottle under each method? What is considered as normal and abnormal spoilage, respectively in the wine making process? How are the costs associated with normal and abnormal spoilage treated? Is it appropriate to ignore the cost of normal spoilage because all spoilage is normal?

Problem 2. Decision Analysis: Myka would like to maintain a 50% gross profit to cover AVS's administrative expenses of US$125,000 and target a 15% net profit. What should the target cost per case be in order to achieve these goals? Does the current production report in AVS help achieve these targets? Does your final production report show costs per case that will lead to achieving these targets?

Problem 3. Ethical Implications: What are the possible reasons for managers to state that all spoilage is normal? What additional information would you request from managers to confirm that there is no abnormal spoilage and that all spoilage is normal?