In the report, various excel tools have been evaluated to manage the production process of ABCD limited. In this report, various excel tools have been used to reach over a conclusion about the total production units. It explains that how much production units must be produced of Football and Basketball by the company.
The main purpose of conducting this study and prepare the report is to evaluate the production process of ABCD limited and make a recommendation to the company about total production units. This report explains to the management of the company that how much basketball and football must be manufactured by the company to improve the profitability position and the overall return of the company. This decision has been made after evaluating all the production aspect of the business.
The case explains that the ABCD is a manufacturing company which produces the sports equipment that includes football and basketball. On the basis of the given machine hours, total production units of the business has been measured. As well as various other production aspects such as labour hour, selling price etc has also been taken into concern for this report.
To evaluate the company’s production units and the level where the profitability level of the business would be at its best, a excel report has been prepared. In order to solve the case, machine hours has been taken into context and it has been found that in the given machine hours how much units could be produced by the company which could be sold and offer huge return to the company (Brooks & Mukherjee, 2013). The calculations brief the total labour hour to produce the unit of basketball and football is 0.5 and 0.3 hour.
The evaluation explains that in case of manufacturing the football and basketball, machine hours would be 21000 which are quite lesser than the available machine hours. So, the company could improve the production level of equipments. In case of utilizing all the machine hours, company should manufacture 55000 units and 40000 units of basketball and football (Goetsch & Davis, 2014). It would help the company to manage and improve the production level of the business.
In addition, if the production units of the company would be improved than it will lead to the higher sales and ultimately, the total profitability level of the business would also be improved. The case explains that the fixed cost of production is connected to the total machine hours. It further explains that in case of production of 55,000 basketballs, the profitability level of ABCD limited would be $ 3,56,000. And in addition, the profitability level from football would be $ 2,28,960 (Hilton & Platt, 2013).
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Statement of profit |
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Basketball |
Football |
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Per unit |
55000 units |
Per unit |
40000 units |
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Selling price |
$ 14 |
$ 770,000 |
$ 11 |
$ 440,000 |
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Less: |
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Material Cost |
$ 2 |
$ 110,000 |
$ 1 |
$ 50,000 |
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Labour cost |
$ 3 |
$ 165,000 |
$ 2 |
$ 72,000 |
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Gross Profit |
$ 9 |
$ 495,000 |
$ 8 |
$ 318,000 |
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Tax Cost |
$ 138,600 |
$ 89,040 |
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Net Profit |
$ 356,400 |
$ 228,960 |
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Working Note: |
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Total Machine Hours |
39000-40000 |
Hours |
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In case of 30000 units of basketball, total machine hour would be |
15000 |
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Whereas, In case of 20000 units of football, total machinery hour would be |
6000 |
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Though, 21000 will be the total machine hours and thus the rest machines would be idle. So, it is suggested to the company to enhance the production level of basketball and football. |
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Further, in case of 55000 units of basketball, total machinery hour would be |
15000 |
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Whereas, In case of 40000 units of football, total machinery hour would be |
12000 |
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Thus, 39500 hours would the total machine hours. If the production of basketball and football would be 55000 units and 40000 units. So, company is suggested to the company to manage the Production of basketball and football to 55000 units and 40000 units (Zimmerman & Yahya-Zadeh, 2011). |
On the basis of the above tables, it has been estimated that the business should produce the 55,000 and 40,000 units of basketball and football to improve the profitability level, production level as well as the utilization of available resources of the business. The calculations explain that the profitability level of the business would also be improved to the $ 3,56,4000 and $ 5,28,960 in case of basketball and football.
The above evaluation and the spreadsheet calculations of this case explain about the below findings and these findings must be considering by the management while making better decision about company’s position:
Conclusion:
On the basis of evaluation on ABCD limited and their production level, it has been measured that the business should produce the 40000 and 55000 units of football and basketball. These changes in the production level of the business would improve the level of the profitability position and utilization of all the resources of the business. The main factor in the production system of the business is total machine hours which mainly affect the production process of the company. The evaluation brief that the company could produce the 40000 and 55000 units of football and basketball.
Further, it has been estimated that in case of production of 55,000 basketballs, the profitability level of ABCD limited would be $ 3,56,000. And in addition, the profitability level from football would be $ 2,28,960 in case of production of 40000 football units.
The management of the company is also suggested to conduct a market feasibility study to evaluate the demand of the football and basketball in the market so that the production could be done in that way. If the demand of the products is lower than it could lead to the business towards the losses.
References:
Brooks, R., & Mukherjee, A. K. (2013). Financial management: core concepts. Pearson.
DRURY, C. M. (2013). Management and cost accounting. Springer.
Garrison, R. H., Noreen, E. W., Brewer, P. C., & McGowan, A. (2010). Managerial accounting. Issues in Accounting Education, 25(4), 792-793.
Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper Saddle River, NJ: pearson.
Hilton, R. W., & Platt, D. E. (2013). Managerial accounting: creating value in a dynamic business environment. McGraw-Hill Education.
Zimmerman, J. L., & Yahya-Zadeh, M. (2011). Accounting for decision making and control. Issues in Accounting Education, 26(1), 258-259.
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