Case Study : Anagene Inc. Essay

1484 Words May 24th, 2016 null Page
Anagene Inc., a genomics instrument company, manufactures Anagene Cartridges (a device that analyzes both single nucleotide polymorphism (SNP) and short tandem repeat (STR) forms of DNA for experimental use to find the best way to fight a specific diseases). The President and CFO of the Anagene, Inc., Gerald Kelly, currently faces difficult issues in predicting future profits from fluctuating gross margins. At the January 2001 board meeting, Kelly was questioned about the 40% increase in standard costs and was asked to find better ways to calculate product costs and gross margin.

Problems with Standard Cost Calculation:
● Decreasing cartridge margins - raised questions about the long-term profitability of the business.
● Fluctuating month-to-month margins - made it difficult for board members and analyst to understand short-term profitability.

Due to the fluctuating margin critically impacts the company’s pricing decisions and profit, it is necessary for Kelly to consider new costing method based on capacity. Kelly asked Daniel Yeltin, a CPA, to apply the practical capacity concept to cartridge costs.

This report will include:
● Analysis of the standard cost system, the variable costing basis, and the practical capacity concept.
● Possible outcomes of a new approach to cost the Anagene Cartridge. This new approach could help Kelly in the next board meeting.

Anagene, Inc. allocated overhead costs to standard product costs using budgeted and forecasted volumes.…

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