Thomas Foods Case Study Summary

The objective of Thomas Foods is to insulate the company from the financial blow of substantial increments in the costs of deliver from neighborhood farmers. The main factor that would cause this adjustment in value that Thomas Foods ought to be worried about is the conceivable fluctuation of weather conditions. Thomas Foods is keen on deciding if hedge accounting would be the best answer for protect the company's operating pay, and they have hired me as a consultant to additionally investigate this issue. My thorough research process on the topic has driven me to reason that hedge accounting works best when the transaction is made with the first source, for example, the farmer, implementing a Purchase Order system will be the most beneficial …show more content…
In the case of Thomas Foods, the local suppliers and vendors would be the original source that determines the selling price of the produce or the baseline price of the goods. The most valuable result for Thomas Foods would be to implement a purchase order system rather than implementing a hedging strategy. When implementing a hedging strategy for the company, the controller would need to have extensive training to account for the strategy itself and the accounting that needs to go behind it. With the implementation of a purchase ordering system, the controller would need very minimal training
My recommendation of implementing a purchase order system for the company, the company’s controller would need to have significant training to implement the hedging strategy. The reason for why the training of the controller would be less as it wouldn’t affect the budgeting process employed by Thomas Foods and it would help Thomas Foods simplify their current system. Thomas Foods would be able to set their pricing to local grocery stores because the company locked in their suppliers at specified rates and