Reference no: EM132285732
CGMA case study
Read the given case study. You are required to:
1. Explain how, according to you as an accounts manager, impala Platinum was able to improve their business situation.
2. It is commonly suggested that a management accounting system should be capable of supplying different measures of cost for different purposes. You are require to set out the mar types of purpose for which cost information may be required in a business organisation and to discuss the aiternative measures of cost that might be appropriate for each purpose.
Task II
The Mexet ltd. is a manufacturer of clothing that sells its output directly to clothing retailers In the UK. One of Its departments manufactures sweaters. The department has a production capacity of 50 000 sweaters per month. Because of the liquidation of one of its major customers the company has excess capacity. For the next quarter, current monthly production and sales volume h expected to be 35 000 sweaters at a selling price of OMR40 per sweater. Expected monthly costs and revenues for an activity level of 35 000 sweaters are as follows:
|
OMR |
OMR per unit |
| Direct labour |
420000 |
12 |
| Direct materials |
280000 |
8 |
| Variable manufacturing overheads |
70000 |
2 |
| Manufacturing fixed (non variable) costs |
280000 |
8 |
| Marketing and distribution fixed (non-variable) costs |
105000 |
3 |
| Total costs |
1155 000 |
33 |
| Sales |
1400000 |
40 |
| Profit |
245000 |
7 |
Mexet ltd. is expecting an upsurge in demand and considers that the excess capacity is temporary. Therefore, even though there is sufficient direct labour capacity to produce 50 000 sweaters, Mexet Ltd. intend to retain the temporary excess supply of direct labour for the expected upsurge in demand.
A leisure company located overseas has offered to buy 15 000 sweaters each month for the next three months at a price of OMR 20 per sweater. The company would pay for the transportation costs and thus no additional marketing and distribution costs will be incurred. No subsequent sales to tilt customer are anticipated. The company would require its company logo inserting on the sweate and Mexet ltd. has predicted that this will cost OMR1.000 per sweater.
Should Mexet ltd. accept the offer from the company? Justify your answer with calculation evaluation and explanation.
Task III
Shown below is a typical cost-volume profit chart:
Required:
Explain to a colleague who is not an accountant the reasons for the change in result on this cost-volume-profit chart from a loss at J point (a) to a profit at point (b).
Task IV
If material costs are a significant part of the total costs in a manufacturing company, describe a technique of material control with an example that might be used in order to effectively control costs, paying particular attention to stock control aspect.
References
At least five references in Harvard Referencing style.
Attachment:- Case.rar