Samuel Miliken's company has reported losses from operations for several years. Industry standards indicate that prices are normally set at 30% above manufacturing cost, which is where Miliken has set them. Assuming that his other costs are aligned with industry norms and the company uses a process cost system, how could Miliken continue to lose money while his competitors earn a profit?
Imagine you have been hired, based on your considerable experience in the cost accounting field, to gather the necessary information to recommend a course of action to the company's manufacturing managers. Explain where you would begin gathering pertinent information to share. Identify process manufacturing costs that may be causing this situation. Lastly, recommend a course of action to follow.