Question

Sycamore Brewing brews many varieties of beer. Company founders Sarah Taylor Brigham and Justin Brigham know that financial success depends on cost control as well as revenue generation.

Write up a summary and explain your reasoning for the following:

• If Sycamore Brewing wanted to expand its product line to include whiskey, what activities would it need to perform that are not required for its current product lines?
• Related to part 1, should the additional overhead costs related to new product lines be shared by existing product lines?

Answer 1

1. In order to expand its product line to include whiskey and also to keep the objectives of company of cost control and revenue generation, Sycamore brewing need to analyse the cost that is required for including the whiskey.

And If the stock and the material is in excess stock for beer production, it need to analyse that whether such excess stock will be beneficial to consider for whiskey production or to sell in the market at realisable value or to keep for further production of Beer.

Relevant Cost should be adopted for considering the cost and revenue generating in case of whiskey production.

2. Additional overhead cost should not be shared among the existing product lines by new product lines since the cost has already been incurred by existing one and this additional is allocated cost which is allocate to only new product lines.

Thankyou....