1. Identify the flaws associated with the current method of assigning shipping and warehousing costs to
Sharp’s products.
2. Compute the shipping and warehousing cost per ton of LLHC sold by using the new method suggested
by Jennifer and Kaylin.
3. Using the new costs computed in Requirement 2, compute the profit per ton of LLHC. Compare this
with the profit per ton computed by using the old method. Do you think that this same effect would be
realized for other low-volume products? Explain.
4. Comment on Ryan’s proposal to drop some high-volume products and place more emphasis on lowvolume
products. Discuss the role of the accounting system in supporting this type of decision making.
5. After receiving the analysis of LLHC, Ryan decided to expand the analysis to all products. He also had
Kaylin reevaluate the way in which mill overhead was assigned to products. After the restructuring was
completed, Ryan took the following actions: (a) the prices of most low-volume products were increased,
(b) the prices of several high-volume products were decreased, and (c) some low-volume products were
dropped. Explain why his strategy changed so dramatically.