Management Accounting Essay Example | Topics and Well Written Essays - 2000 words - 5

Management Accounting - Essay Example mission rate coupled with vital issues required by the management before making various decisions necessitated a close and thorough analysis of Ozmedic. The report begins by presenting a budgeted income statement when the commission is increased and when the firm hires is own salespeople. The breakeven point and the level of indifference between the two options are then computed. The report then proceeds by recommending the best option between increasing the sales commission and hiring own sales people. It will be illustrated that it is better to hire own salespeople than increase the commission to 20 percent. Further, the report presents the launch date for the BPM-201 as well as factors that should be considered when deciding on launch date. In addition, the report will investigate if accepting the local government offer is viable for the firm. The report then establishes the maximum price to be paid for the outside supplier of Penlight Division for Instrulite. It then concludes by explaining other factors to be considered when deciding whether to outsource apart from the price of the product. Level of indifference between the two options refers to the sales volume at which the net income of the two options would be the same. From the appendix 2, the level of indifference would be AUD $18,000,000. From this volume of sales, the Ozmedic’s management would be indifferent of the option to choose because both results to a loss of AUD $2,840,000. Even though, this volume of sales would result to the same figure, it is not viable because the business would incur a loss regardless of the option adopted. The firm’s management should increase its promotional efforts so that a more viable level is achieved. Permanent organizations like Ozmedic would like to maximize their profits by reducing transaction costs. Given any level of sales, reduced expenses results to high profits. The best option that would help the company maximize its profit is, therefore, hiring