preview

Jefferson Multimedia Inc Case 3 all

Better Essays

Jefferson Multi Media, Inc. The Entity’s Background: Jefferson Multi Media Inc. is a production company that provides services to recording artists. The company has two main divisions: the audio division and the video division. The audio division is charged with executing all necessary procedures to finalize the recording process. For example, the company records the artists, adds special effects, develops concepts and designs, and finally promotes artist relations to ensure that artists are satisfied with the services provided by the company. To finalize the audio production process, the company’s audio division produces the final work in a form of audio cassettes, computerized disks, and digital sound tracks, which are transferred …show more content…

We agree with the way the cost per division is being calculated. However, we propose a different way to allocate indirect cost per product based on the number of hours calculated for each product and an estimate of the number of units needed for special effects, concept/design, and artist relations related to each product. Based on the calculations provided by Mr. King, we used the cost per hour or unit shown on the Resource-Based Cost Report to calculate the costs of each resource by product line. Once we had the cost resource-based, we calculated a percentage for Cassettes, CDs, and Digital Sound Tracks (DST). The percentage was applied to the “indirect costs allocated from central office”, shown on the product-type cost report, for each of the previously mentioned products. When we got the indirect costs, we noticed that DST absorbed most of those costs, which increased from $53,227 to $105,590. DST requires a lot more of recording studio hours, extensive special effects, new concept design, and continued artists relations. When comparing the indirect costs for Cassettes and CDs calculated using the Product Type-Based and the Service-Based systems, we noticed that both products’ indirect costs decreased by using the Service-Based system. Cassettes require less recording studio hours, moderate special effects, none modification to the

Get Access