Artists Rights and Lady and the Tramp, Research Paper Example

Product costing could be understood in conjunction with inventory valuation in a manner that provides a total cost of goods and a total cost of inventory. Therefore, this value is related to overhead costs, but can be used more accurately in terms of the Lady and the Tramp to understand the profit reductions related to the distribution of the videocassettes under questions. It is therefore beneficial to determine what the cost of distribution was per unit. However, this cannot be done in this situation because the total number of cassettes sold must be known. An addition of the direct materials costs, total direct labor costs, and total manufacturing overhead costs must be calculated and then added together. This value should then be divided by the number of cassettes.

Inventory valuation methods allow the company to determine the cost of goods sold based on the inventory. Under this model, a physical inventory must be taken at least once a year. In the case of Lady and the Tramp, this requires determining the amount of cassettes produced to the profits generally made for selling the cassettes in addition to the cost of production. This allows the company to gain a greater understanding of the profits that can still me made. In terms of the case study, these are also potentially funds that Peggy Lee is partially entitled to if she wins the case.

Cost-control and long-term decisions to make or buy or discontinue products is particularly relevant in this situation. The company can control the price of its videocassette depending on how many tapes are released. If very few are released, they could be sold for a higher price. If many are released, they will be sold for a smaller price. Therefore, cost-control has an impact on profit in addition to the amount of money Peggy Lee will claim. Similarly, the company may wish to cease the production of the video tapes to prevent Peggy Lee from earning a greater profit. However, the company must consider whether doing so is worth losing the profit that they would have earned if the production were to continue. It appears that more money will be made if production continues, as Peggy Lee is only entitled to a small percentage of profit if she wins the case.

It is necessary to use cost data in decision-making and this is a particularly relevant consideration for this case study. It is important for the company to consider overhead costs, material costs related to the manufacturing of the tapes, labor costs, and marketing costs. In order to determine whether a product is successful, these numbers are needed to determine the price of a product and whether it would be worthwhile and therefore profitable to produce. In this scenario, and additional cost concern is the royalty fees that Peggy Lee is asking for in addition to related legal fees for when the case is brought to court. It is therefore important for the company to reconsider whether profit is being made based on these anticipated added costs. Production should be ceased if no profit is being made due to the accrual of unexpected costs. However, production should continue despite the lawsuit and the potential loss of funds to Peggy Lee if a reasonable profit could still be made.