How should a new general manager determine if a firm's cost analysis system is accurately reporting information?
How should a new general manager determine if a firm's cost analysis system is accurately reporting information?
Trust Mutual Funds manages five no-load mutual funds, charging each fund a management fee; this fee is expected to cover the management team's compensation, the research and marketing expenses, as well as allow for a profit. The firm's new general manager is concerned that the company is not pricing its management fees competitively. In this case, students are presented with two ways to calculate costs (one using the current system and another using a proposed new system) and asked to consider if the current system of reporting might inaccurately reflect TMF's cost information—and account for the difference in fees between TMF and its competitors.