Assignment
I need to write reply(discussion) post for GIVEN ANSWER for the same question.
It should be connected with the previous answer that you've wrore for me. The price is $7, Min 350 words, due in 10 hours
Question:
Bella Bridal Shop Inc. makes customized wedding gowns and accounts for these gowns on a Job Order cost accounting basis. The customer selects a pattern for the basic gown and then selects fabric and trim. Once the design and the materials have been agreed upon, a statement of estimated cost is signed by the company and by the customer.
Overhead is applied based on the number of days a gown is in process. Usually, five gowns are being worked on at a time. Therefore, each gown is charged 1/5 of a daily estimated overhead amount.
Customer Susan Renner's wedding dress took four days to complete. However, after the first three days had elapsed, Donna Lytle, a movie personality, suddenly decided to get married and ordered a very lavish gown. All other work was suspended and the work on Ms. Renner's dress was delayed six days. The final day of its construction was on the tenth day after it had been begun.
Required:
1. You are the accounting manager for Bella Bridal Shop Inc. Write a memo to the billing department. Instruct them as to the appropriate number of overhead days to charge to Ms. Renner's account and why (EXPLAIN in DETAIL).
2. What are your thoughts on how Bella Bridal Shop Inc. handled this overall situation.
GIVEN ANSWER:
To: Billing Team
RE: Susan's Renner (Client)
Please invoice Susan Renner for only four days of our regular overhead calculations. We need to follow our standard policy, only charging clients the days in which the gown is actually worked on. Due to an unexpected order, Susan Renner's dress was put on hold after the work was in process and finished many days later. We should not charge her for the idle days in which the dress was not being worked on. Depending on the date in which we promised on the statement of estimated cost, we should assess if we should give her a discount since this dress was delayed 5 extra days. Please work with the account representative to see what we can do. Ensure that you follow company's policy and procedures when giving the discount.
2). I think that Bella Bridal Shop Inc. should have not stopped all orders to work on Donna Lytle's order. All business operations should have standards and procedures. If Bella's business process is order by date, then they should be diligent and deliver what was agreed upon. As a business you cannot favor clients over other clients. You should only sign on orders that you can process and deliver on time. You want to be known for providing quality products and on time if you are in business like Bella Bridal Shop. If Bella wants to expand their business operations in focusing on a more targeted market like Donna Lytle, more lavish gowns for famous clientele, they should expand their operations and have a business unit for that. They should not give up their core line of business to cater to Donna Lytle. If I were the operations manager, I would have done a cost benefit analysis before stopping all orders to work on Donna's order. Is the total cost of the other 5 gowns (daily process) less than the cost of Donna's lavish gown? What is the business statement of work agreed upon for other clients we are delaying the orders? Are we penalize if we don't deliver at the promised date? How would this affect our reputation?