14 Aug High Fixed costs Bankrupt Twinkie maker – discussion
Review the article in Chapter 2 of the text titled “High Fixed costs Bankrupt Twinkie maker” regarding the bankruptcy of Hostess Brands – maker of the renowned Twinkie! Identify the cause of the bankruptcy in terms of variable costs and fixed costs. Utilize your knowledge of costs to suggest a plan that could have saved Hostess Brands.
High Fixed Costs Bankrupt Twinkie Maker
In 2012, Hostess Brands—owner of the iconic Twinkies lunchbox snack—announced it would go out of business and liquidate its assets. Declining sales and trends toward healthier snacking crippled the company given its high fixed costs—costs that did not decrease as the number of Twinkies and Ho Hos sold declined. After emerging from bankruptcy in 2009, Hostess management tried to turn around the company’s fortunes through innovation and workplace efficiency. Despite initial progress reducing its variable costs, the prices of the commodities that Hostess relied on—corn, sugar, and flour—increased during the recession. Unfortunately for Hostess, the remaining large percentage of its operating costs were fixed because
union contracts made it difficult to close facilities, consolidate distribution routes, or reduce pensions owed to retired workers. By the second half of 2011, Hostess was losing $2 million per week. With a stifling debt burden, the company filed for bankruptcy protection again in January 2012. Further cost reductions proved elusive and controversial negotiations with unions resulted in thousands of employees striking that November. Within days, Hostess collapsed under the weight of its fixed costs and filed to liquidate its assets. The wind down resulted in the closure of 33 bakeries, 565 distribution centers, about 5,500 delivery routes, and 570 bakery outlet stores and the loss of 18,500 jobs. As the story of Hostess Brands illustrates, managers must understand their firms’ costs and closely manage them. Organizations as varied as the United Way, the Mayo Clinic, and Sony generate reports containing a variety of cost concepts and terms managers need to understand to effectively use the reports to run their businesses. This chapter discusses cost concepts and terms that are the basis of accounting information used for internal and external reporting.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Wridemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Place Order” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.