The purpose of this paper is to research a company and describe the primary products manufactured. In addition to, examining the effect of changes in the variable cost fixed cost structure of the company on cost volume analysis decisions by managers. Then, analyze the current cost system used by the company to determine manufacturing costs and examine the benefits of using an activity-based cost system over the traditional system for management decisions. Finally, compare the company’s sales and cost of sales forecast to the actual sales and costs of sales in the current financial statement.
Avon Products, Inc, known simply as Avon, is an American international manufacturer and distributor of beauty, household, and personal care products sold through representatives in over 140 countries across the world. As of 2012, Avon had annual sales of $10.7 billion worldwide (Avon, 2013). It is the fifth-largest beauty company and second largest direct selling enterprise in the world, with 6.4 million representatives (Avon, 2013). Avon Products is a multi-level marketing company. Their "Ding Dong Avon Calling" advertising campaign, which ran from the mid-1950s to 1967, has been called "one of the most deeply ingrained brand identities of the past century"(Avon, 2013). The Company's product categories are broken down into three segments or categories that include Beauty, Fashion, and Home. The Beauty segment consists of color cosmetics, fragrances, and skin and personal care. The Fashion segment of Avon consists of fashion jewelry, watches, apparel, footwear and accessories. Last, the Home segment consists of gift and decorative products, house ware items, entertainment leisure products, and children's nutritional products. The goal of the company is being a global cosmetics brand that targets the market for women, and included among these three categories based on product type (Avon, 2013).
Next, I was look at how managers assume...