Arasu Venkatesh The Classic Pen Company Case

Name : Arasu Venkatesh

Subject : Costing & Control Systems
Assignment Title : Classic Pen Company Case

INFERENCE

• It is clear that the overheads have been distributed uniformly across all
products by assuming that the costs to manufacture the “ed! and “Purple!
pens "ill be the same as that of traditional pens “#lue! and “#lack!$
•  This has resulted
resulted in undervaluing
undervaluing the cost of manufacture
manufacture of the ne" product
product
o%erings$ Since the volumes involved is small the implication high$ The
addition of ne" products has resulted in unaccounted overheads$
•  The A#C analysis
analysis has helped
helped us identify
identify the high
high overheads
overheads of the ne"

product o%ering$

RECOMMENDATIONS

• Increase sales price of “ed! and “Purple! pens to re'ect increased cost of
manufacture$ (o"ever this may be a limited option as only a premium of )*
and +,* can be levied according to the case$
• Increase volumes of “ed! and “Purple! pens manufactured$ This too may be
a limitation as there is no indication as to ho" much can the speciality pens
market absorb these product o%erings$
•

In case neither of the above recommendations

recommendations can be applied it is
recommended that the special pens be altogether stopped as the market is
not conducive for the same$

 The calculation
calculation methodology
methodology is sho"cased
sho"cased in the forthcoming
forthcoming pages$
pages$

Page 1 of 4
 

Arasu Venkatesh The Classic Pen Company Case

Page 2 of 4

Arasu Venkatesh The Classic Pen Company Case

 Page 3 of 4

Arasu Venkatesh The Classic Pen Company Case

Page 4 of 4