3-2 Assignment- Online Marketplace Presentation Speaker Notes

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Southern New Hampshire University *

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311

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Accounting

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Jan 9, 2024

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3-2 Assignment: Online Marketplace Presentation Speaker Notes Nicole Sheppard Southern New Hampshire University ACC 311 – Cost Accounting Tara Willis September 17, 2023

Online Marketplace Presentation Speaker Notes Slide One – Introduction This presentation is for the CFO in regard to the online marketplace. After overhearing a conversation among colleagues purchasing materials online, it was in our best interest to do our due diligence and see if the company could also benefit from ordering materials online. We have conducted an analysis of the numbers after collecting information on the company’s top three products and their material usage, standard cost, and average cost. Slide Two – Key Points A few key points need to be addressed today, with one of the most meaningful being the costs. Purchasing all the raw materials from the online marketplace would make the inventory total cost eight million, four hundred fifty-seven thousand, one hundred and twenty-three dollars, and forty-five cents ($8,457,123.45). To reach this total, the average transaction price of each material was multiplied by the quantity on hand. Then all materials were added together resulting in the inventory cost. The average total transaction price is one hundred fifteen thousand, and fifty-six dollars, and eight cents ($115,056.08). The average individual transaction price is seven dollars and sixty-one cents ($7.61). All materials would be lower if the company was to use the standard price for its inventory costs. Eight million, three hundred and ninety-five thousand, one hundred and fifty-six dollars, and twenty-six cents ($8,395,156.26) is the total standard price for all materials. Totaling the average price column and the standard price column on the data set results in the standard price column being much lower with one hundred and twelve thousand, nine hundred and forty-

two dollars, and ninety-six cents ($112,942.96) while the average transaction price total is one hundred and fifteen thousand, fifty-six dollars, and eight cents ($115, 056.08). The lowest inventory price would be exceptionally lower than the marketplace value by being able to freely choose either the average price or the standard price for the company’s raw materials within the online marketplace by one hundred and fifty-nine thousand, nine hundred sixty-seven dollars, and nineteen cents ($159,967.19). The lowest inventory cost’s value would total five million, six hundred ninety-one thousand, nine hundred seventy-three dollars, and sixty-two cents ($5,691,973.62). We arrive at this total by using a formula that helps decide if the average or standard price is lower, then taking that number and multiplying it by the quantity on hand. Once the company obtains the totaled prices, it can acquire the total inventory cost of either the average or standard price, choosing whichever is lower in the online marketplace. I was also able to determine that no vendor always sells lower than the standard price cost of all materials on hand. Slide Three – Data Set One Visualization These two visualizations convey the standard usage frequency of the products used. The bar chart exhibits the frequency of the usage of specific products provided, while the line graph reveals each product broken down by their product ID, 1, 2, or 3, with the frequency which was used. Products with ID 2 were used the least amount of times at thirty (30) times, and products ID 3 were used the most at forty-two (42) times. Slide Four – Data Set Two Visualization

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This visualization is constructed of the great amount of data collected on the pricing of the raw materials in the online marketplace. The numbers were computed by taking the average of the standard pricing (bar one), the transaction price (bar two), and the market lower value (bar three) and comparing them. The average transaction price is the highest at seven dollars and sixty-one cents ($7.61), while the market lower cost is the lowest at five dollars and six cents ($5.06). Slide Five – Online Marketplace Options After reviewing the costs of purchasing raw materials from the online marketplace, we can now see why our competitors are switching. It allows them to save money on their raw materials which increases their profits in the long run. Being able to produce their products at a much lower cost allows them to generate more profit when selling at an increased price too. The online marketplace offers affordable material costs, allowing companies to obtain them at a lower cost. In order for our company to make this switch, we have used diagnostic and descriptive analytics to calculate costs and future outcomes when jumping to the online marketplace. Using descriptive analytics describes what’s happening now and what happened in the past. Using diagnostic analytics gives meaning to the patterns and observations occurring in descriptive analytics. The company can ensure that they have made a cost-effective decision and keep the costs from rising if it continues to analyze these analytics as it moves forward and continues with the online marketplace.