英语论文网

Mn 204 Management Accounting
2nd term assignment
Due date Thursday 12th March 2009 12 noon.
The assignment is about overheads and the issue of accuracy of costs and 代写assignment draws on ideas
from Activity Based Costing theory.
The Cylinder manufacturing company.
The Cylinder manufacturing company is a large producer of oil tanks and is located in the
north of Buckinghamshire in the United Kingdom. It was started as a company in 1970
and has enjoyed steady growth in both sales and profits.
Davina Brinkwater, the founder’s daughter, joined the company in 1998 after graduating
from university with a degree in accounting and finance. One of her first tasks was to
revise the Accounting system as there was a demand for more accurate product cost
information to support the firm’s strategy of offering keen prices in a highly competitive
market where a few firms dominated.
Davina is surprised by the depth of opposition that she faces in trying to change the
organisation. Some members of the firm appear to be happy to accept the shortcomings
of the “old” system on the basis that there are comfortable with it and they understand its
workings. However, with the support of her powerful and influential father, she wins the
argument and now has the job of implementing her “new “system.
Davina’s father has now retired and she is conscious that she must prove herself to the
organisational members and is aware that disruption due to the implementation of a new
system can be upsetting. However, at the same tome, profits are down below budget and
the accountant is very critical of the current costing system saying that it is out of line
with the updated manufacturing systems as well as way behind current theoretical ideas
on product costing. According to the accountant, they are still absorbing overheads on
labour hours and that they have an artificially high overhead absorption rate of £150 per
labour hour. He claims that they are pricing themselves out of the market on their
established product line. He suggests that product costs would be more meaningful if
absorbed on the basis of machine hours.
Davina decides that she should investigate this matter. Over the past five years, overhead
costs had risen to £599,300 per month, a 46% increase, while direct labour hours have
risen from £168,200 to £170,000, a small increase. The product processes are now largely
mechanised with a high level of automation. Direct labour hours are 4,000 compared with
machine hours of 6,500 (it is possible that some labour is still being classed as direct
when in fact the change in technology and automation has altered the nature to indirect).
Davina asks the manufacturing manager about the rise in overhead costs but this results
in him getting very upset and saying—“How can I keep costs down when marketing
ignore our standard specifications and insist on 23 different versions of every product? I
https://www.51lunwen.org/daixieassignment/need more specialist engineers to monitor the changes and they do not come cheap. Also
there are completely new parts coming through from design with huge material costs;
materials handling is an increasing headache. And the number of specials going through
on small production runs continues to increase. I need many more set-ups per shift and it
is skilled work, but you cannot pick up that sort of skilled labou