Review the article in Chapter 2 of the text titled \u201cHigh Fixed costs Bankrupt Twinkie maker\u201d regarding the bankruptcy of Hostess Brands \u2013 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.<\/b><\/p>\n
High Fixed Costs Bankrupt Twinkie Maker<\/p>\n
In 2012, Hostess Brands\u2014owner of the iconic Twinkies lunchbox snack\u2014announced 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\u2014costs 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\u2019s fortunes through innovation and workplace efficiency. Despite initial progress reducing its variable costs, the prices of the commodities that Hostess relied on\u2014corn, sugar, and flour\u2014increased during the recession. Unfortunately for Hostess, the remaining large percentage of its operating costs were fixed because<\/p>\n
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\u2019 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.<\/p>\n","protected":false},"excerpt":{"rendered":"
Review the article in Chapter 2 of the text titled \u201cHigh Fixed costs Bankrupt Twinkie maker\u201d regarding the bankruptcy of Hostess Brands \u2013 maker of the renowned Twinkie! Identify the cause of the bankruptcy in terms of variable costs and Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-49562","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/49562","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=49562"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/49562\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=49562"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=49562"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=49562"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}