You Make the Call-Situation 3

question 100

Essay

You Make the Call-Situation 3
Dr. Juldiz Afgazar, a native of the Republic of Kazakhstan, had been invited to spend a semester in the United States as a visiting scholar in entrepreneurial finance. Kazakhstan gained its independence from the former Soviet Union in 1991, and only after that were laws passed allowing citizens to own private businesses. Dr. Afgazar wanted to learn more about the free market economy of the United States to determine whether such a system could be implemented in Kazakhstan.
Prior to this visit to the United States, Dr. Afgazar had not traveled extensively outside her country. Although she enjoyed many aspects of U.S. culture, she was particularly impressed by the seemingly unlimited quantity and variety of goods and foods that were readily available. After a visit to a local restaurant's pizza buffet, she became an avid fan of American-style pizza! Dr. Afgazar found the crisp yeast crust, spicy tomato sauce, melted mozzarella cheese, and assortment of toppings to be a delicious combination. Pizza was an entirely new type of food for her, since it was not available in Kazakhstan. A true entrepreneur, Dr. Afgazar began to wonder if a pizza restaurant could be successful in her country.
(Source: Developed by Elisabeth J. Teal of Northern Georgia College and State University, Dahlonega, Georgia, and Aigul N. Toxanova of Kokshetau Higher College of Management and Business, Kazakhstan.)

---

Definitions:

Process Cost Summary

A report detailing the costs associated with each phase of the manufacturing process, showing material, labor, and overhead expenses.

Management

The process of directing, controlling, and overseeing the operations and activities of an organization or group to achieve its objectives.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, treating them as if they were a certain number of fully completed units.

Conversion Costs

The combined cost of direct labor and manufacturing overheads incurred to convert raw materials into finished goods.