Part A
1) The known firm in the global market has detected new way of
competitiveness that is supply chain management, supply chain management is
considered as group of approaches used to effectively merge or consolidate all
suppliers, inputs, client and stores, in order to fulfill production operation
at the accurate standards in accurate quantities and efficiently allocated at the right customer at right time with
perfect quality and also reduce the expenses of manufacturing operation, it contains
all connected actions or business that are basic in order to produce the final
items and sell it for the customers in market and face the client requirements
and the pleasure the clients, this shows that supply chain management contains
the actions that are accountable for converting the raw materials or inputs to
the finished goods through ought the global market. The actions and roles of supply chain management sector in
the firm include the following actions: administrating of inventory and inputs,
buying the transportation service, handling with suppliers to get raw materials
, supervision and administrating the process of transportation, no doubt supply chain management assist the
firms to fulfill its organizational targets or missions via minimize working
capital size, raise the round of inventory turn, administrate the accounts receivables as well as payables.
There are several definitions that
relates to value chain, Porter has specified value chain as the interior operation and business
performed and operated via the firm to outline, manufacturers , promotes, deliver
its finished items in the global market. Value chain is considered as set of functions which are fulfilled via company
to make value to its items to satisfy the customers, management accounting performs
material part to assist directors to organizes these business roles, these roles of value
chain contains the following:
a) Research and
development, this is the operation in which operated
by the company to get notions to make or manufactures new items or services.
b) Design or outline: it’s the operation
of outlining and engineering of the items and company’s services.
c) Production or manufacturing process ,
it’s the operation or buying and coordinating the inputs and resources required
to make the finished items and deliver it.
d) Marketing: when the firm make finished items, the marketing operation starts
via getting the way that empower the firm to perform promotion and vend finished
items to clients.
e) Distribution: when the client recognize our items via marketing operation,
distribution process starts by the firm through effective ways to deliver the finished
items and service to the client.
f) Service: it is considered the process after the selling , the firm support
services or actions after vending to its clients like repairing operation of their
product, services to support competitiveness to the company.
KVK
Industries could make value to its items through stratifying
the roles of value chain analysis through
ought the manufacturing operation, KVK Industries
should create research to establish new products or improve its current items, KVK
Industries should find the way of production that can
enable it to achieve lower cost by achieving economics of scale and high
production . the CEO should oversee the
financial operations to control the company and they should depend on
innovative equipments and skilled people to minimize the cost.
2-
|
26000 |
Beginning inventory of direct materials |
|
140000 |
+ purchases of direct
materials in 2018 |
|
(12000) |
-Ending inventory of direct
materials in 2018 |
|
154000 |
=direct materials used in 2018 |
|
154000 |
Direct materials used in 2018 |
|
154000 |
+ Direct manufacturing labor |
|
25000 |
+Total manufacturing
overheads costs |
|
333000 |
=Manufactured cost incurred
in 2018 |
|
Beginning
work in process inventory +
manufactured cost incurred in 2009 -
Ending work in process inventory |
16000 333000 (18,000) |
|
Cost
of goods manufactured |
331000 |
Cost of goods sold
|
Beginning
finished goods inventory +
Cost of goods manufactured |
40000 331000 |
|
Cost
of goods available for sale -
Ending Finished goods inventory |
371000 (28000) |
|
=
Cost of goods sold |
343000 |
(ii)
Gross profit
|
Sales
-
Cost of goods sold |
398000 (343000) |
|
Gross
profit |
55000 |
|
KVK Industries Income statement |
|
|
Sales revenue |
398000 |
|
Less: cost of goods sold |
(343000) |
|
Gross profit |
55000 |
|
Less: selling expenses |
(15450) |
|
Less ; administrative expense |
(9560) |
|
Operating income |
29990 |
3-
(i) Total cost for output for product M
|
|
First quarter |
Second quarter |
Third quarter |
Fourth quarter |
|
Expected
units to be produced × Variable cost per unit |
100,000 30 $ |
200,000 30 $ |
500,000 30 $ |
400,000 30 $ |
|
Total
variable cost + Fixed
costs |
3,000,000 200,000 |
6,000,000 200,000 |
15,000,000 200,000 |
12,000,000 200,000 |
|
Total
cost for output |
3,200,000 |
6,200,000 |
15,200,000 |
12,200,000 |
(ii) Total cost per unit
|
|
First year |
Second year |
Third year |
Fourth year |
|
Total
cost for output ($) ÷ Expected units produced |
3,200,000 100,000 |
6,200,000 200,000 |
15,200,000 500,000 |
12,500,000 400,000 |
|
|
32 $ |
31 $ |
30.4 $ |
31.25 $ |
4) Calculating operating income for two options for
product “N” in different years
In existed situation
|
Sales
[1200 units × 200 $] -
Variable
costs [1200 × 48 $] |
240,000
$ (57,600) |
|
Contribution
margin - Fixed
Costs |
182,400 (40,000) |
|
Operating
profit |
142,400 |
In additional promotion
|
Sales
[1500 units × 200 $] -
Variable
costs [1500 × 48 $] |
300,000
$ (72,000) |
|
Contribution
margin - Fixed
Costs |
228,000 (50,000) |
|
Operating
profit |
178,000 |
According to that , I advice the firm to stratify the extra promotion.
This could assist the firm to raise unit sold to 1500 units, and then the
profits also will raise to the amount of 178,000 $.
Part b
Job Order Costing for Modern Furniture
(1)
Absorption rate =estimated overhead/
budgeted activity level
Assembly Department predetermined overhead
rate:-
Predetermined overhead rate = Estimated
total manufacturing overhead cost/Estimated total amount of the allocation base
The assembly department =135000/4500
MHs=30 H per machine hour
Finishing
Department predetermined overhead rate:-
Predetermined overhead rate = Estimated
total manufacturing overhead cost/Estimated total amount of the allocation base
The Finishing department=103000/6250$ direct labor hours
=16.48 per direct labor hour.
Assembly Department
overhead applied:
62.5 machine-hours x $30
per machine hour… $ 1875
Finishing
Department overhead applied:
$150 direct labor cost x 16.48
.............................
2472
TOTAL OVERHEAD COST………………………….. $ 4347
2.
-Total cost of Job No. 555
|
|
Assembly Dept. |
Finishing Dept. |
Total
$ |
|
Direct material |
$ 1700 |
$ 1125 |
$ 2825 |
|
Direct labor |
$2025 |
$ 1800 |
$ 3825 |
|
Manufactured overhead applied |
1875 |
2472 |
4347 |
|
Total cost |
5600 |
5397 |
10997 |
Unit cost for Job No. 555:-
Total cost, $10997/
500 chairs = $21.994
|
Total cost |
5600 |
5397 |
10997 |
|
÷Units |
500 |
500 |
500 |
|
Cost per unit |
11. 2 |
10.794 |
$21.994 |
3-
The advantages of using ABC
system ;
1-support the utilizing of ABM in the company
2-ABM concern on
administration’s attention on the actions which leads to occur costs
3-superior item and pricing decisions
4-minimized costs
5-operating the business more effectively
6-ignoring business which do not make new values
7-developing the product design or outline
8-result in developed actions and pleasured clients and raised net
income .
9-accurate product cost
The disadvantages of using ABC
system ;
1- It
is expensive and complex because it include many costing pools and different
cost drivers
2-
The basic costs and disadvantage of an activity based costing are considered the measurements essential to fulfill it. activity based costing needs administration to predict costs that
links to activity pools and specifying and assessing cost drivers to be cost allocation
bases.
3-
Activity based costing
need several computations to specify costs of items and services.
4-
These assessment are
expensive. activity based costing rates
also requires to be refreshed regularly.
5-
Choosing the drivers is considered hard process.
References
Charles T. Homgren.,2010,Cost
Accounting, 14th Edition 2010.
Cherrington, J., 1985,
et al. Cost and Managerial Accounting.
Micheal H. Hugos ,2005, Essential of Chain
Management, Third Edition 2005
