Question

What information is relevant when deciding whether to laser tattoo fruits and vegetables instead of using paper or plastic stickers?

Every piece of fruit and vegetables sold in U.S. grocery stores has a small sticker on it. These stickers include food type, origin, and whether it was grown organically. Laser Food is a company based in Spain that makes laser marking machines. These Laser Mark machines tattoo every piece of fruit and vegetable with identifying information. The laser tattoos replace traditional produce stickers. In addition to the required information, laser tattoos on produce can also include individualized information such as harvest date, spoil date, and other custom data.

Produce packing plants currently have machines that put the stickers on each piece of fruit and vegetables. The Laser Mark machines are more expensive than traditional sticker-labeling machines, but can process more pieces of produce per hour than traditional machines.

Fun fact: The paper stickers on fruit are edible, as is the glue backing them.

Why do you think that individual pieces of fruit and vegetables are required to have stickers on them if they are sold in U.S. grocery stores?

If a produce packing plant is considering the purchase of a Laser Mark machine, what information would be relevant to the purchase decision?

List at least three advantages to laser tattoos over traditional stickers for individual pieces of fruit and vegetables.

What managerial accounting tools could you use to analyze the decision about whether to purchase a Laser Mark machine or to continue to use a traditional sticker machine? Explain.

Can you think of any reason that using a laser tattoo instead of a sticker would be a more “green” option? Explain.

Answer 1

It is a law to properly label the food sold in the grocery stores in U.S. Also, such information gives all the detailed information regarding the food safety and nutritional benefits. So, consumers know what to consume and how much to consume. The Food and Drug Administration (FDA) is responsible for assuring that foods sold in the United States are safe, wholesome and properly labeled. This applies to foods produced domestically, as well as foods from foreign countries. The Federal Food, Drug, and Cosmetic Act (FD&C Act) and the Fair Packaging and Labeling Act are the Federal laws governing food products under FDA's jurisdiction. The Nutrition Labeling and Education Act (NLEA), which amended the FD&C Act requires most foods to bear nutrition labeling and requires food labels that bear nutrient content claims and certain health messages to comply with specific requirements.

Produce plant should decide whather to purchase the Laser Mark machine using the following information:-

1) Cost savings with purchase of new machine.

2) Additional benefits with the purchse of new machine.

3) Positive NPV of cash flow with the purchase of new machine.

Advantages of laser tattoos over traditional stickers:-

1) Process more pieces of produce per hour than traditional machines.

2) More detailed information about the nutrition and food safety.

3) Easy to change the information with the change in law.

We can make use of the following managerial accounting tools for better decision making:-

Cash flow analysis - The movement of cash from one period to another can be find out through this analysis. Besides, the reasons for cash balance and changes between two periods are also find out. It studies the cash from operation and the movement of cash in a period.

Fund flow analysis - This analysis find out the movement of fund from one period to another. Moreover, this analysis is very useful to know whether the fund is properly used or not in a year when compared to the previous year. The working capital changes and funds from operation are also find out through this analysis.

Budgetary control - Under Budgetary control techniques, future financial needs are estimated and arranged according to an orderly basis. It is used to control the financial performances of business concern. Business operations are directed in a desired direction.

Return on capital employed - This shows the total return which we receive on the total capital employed.

Laser tattoo is more green option then the traditional stickers. Using laser tattoo can help save a lot of paper which is used to make traditional stickers. With this, less trees have to be cut which is used to make the papers. And so, less trees will be cut from life and they will help save the environment from many natural hazards.