Ace Fertilizer Company
ACE FERTILIZER COMPANY:
ETHICAL COST ALLOCATIONS
AND PRICE DETERMINATION
Presented By:
Brittany Chumbley
D.J. Gastador
Don Muller
Tyler Patton
Industry Report
• Nitrogen(N), phosphorous(P) and potassium(K) are the three primary components of fertilizer.
• Top three fertilizer-utilizing U.S. crops: corn, wheat, soybeans.
• Top five fertilizer-consuming states: Illinois, Iowa, Ohio, Texas,
Indiana.
• The fertilizer manufacturing industry is responsible for approximately
33,000 jobs in the United States.
• Fertilizer production facilities are located in 34 states.
• The U.S. nitrogen fertilizer industry operates production plants in 27 states, the phosphate fertilizer industry operates production plants in
12 states and potash is mined in Michigan, New Mexico and Utah.
• The United States is the second largest producer and consumer of fertilizer in the world. China is the first in both categories.
• Research shows that fertilizers account for at least one-third of all crop yields in the world.
• The fertilizer industry has annual revenue of approximately $10 billion. pulse.pharmacy.arizona.edu
Facts
• Abby Conroy (Assistant Director) – Abby is responsible for the design, bidding, manufacture, and ultimate delivery of special order to customers. Abby develops and completes all special order contracts.
• George Smilee (Director of Manufacturing) – George initials his approval of the contracts and forward them to the chief operating officer.
• Tom Brennen (Chief Operating Officer) – Tom gives final approval.
• Special order, unless specific authorization is obtained from Tom himself, must be billed at 80 percent over the cost of the order.
• Abby could allocate indirect costs to special orders using activity-based costing.
Rather than simply allocating indirect costs among special orders using a company-wide rate, ABC acknowledges that not all costs are driven by output volume. • Breeland Ltd. requests a special order needing a cleaning solvent that needs 40
gallons
ETHICAL COST ALLOCATIONS
AND PRICE DETERMINATION
Presented By:
Brittany Chumbley
D.J. Gastador
Don Muller
Tyler Patton
Industry Report
• Nitrogen(N), phosphorous(P) and potassium(K) are the three primary components of fertilizer.
• Top three fertilizer-utilizing U.S. crops: corn, wheat, soybeans.
• Top five fertilizer-consuming states: Illinois, Iowa, Ohio, Texas,
Indiana.
• The fertilizer manufacturing industry is responsible for approximately
33,000 jobs in the United States.
• Fertilizer production facilities are located in 34 states.
• The U.S. nitrogen fertilizer industry operates production plants in 27 states, the phosphate fertilizer industry operates production plants in
12 states and potash is mined in Michigan, New Mexico and Utah.
• The United States is the second largest producer and consumer of fertilizer in the world. China is the first in both categories.
• Research shows that fertilizers account for at least one-third of all crop yields in the world.
• The fertilizer industry has annual revenue of approximately $10 billion. pulse.pharmacy.arizona.edu
Facts
• Abby Conroy (Assistant Director) – Abby is responsible for the design, bidding, manufacture, and ultimate delivery of special order to customers. Abby develops and completes all special order contracts.
• George Smilee (Director of Manufacturing) – George initials his approval of the contracts and forward them to the chief operating officer.
• Tom Brennen (Chief Operating Officer) – Tom gives final approval.
• Special order, unless specific authorization is obtained from Tom himself, must be billed at 80 percent over the cost of the order.
• Abby could allocate indirect costs to special orders using activity-based costing.
Rather than simply allocating indirect costs among special orders using a company-wide rate, ABC acknowledges that not all costs are driven by output volume. • Breeland Ltd. requests a special order needing a cleaning solvent that needs 40
gallons