Analysis: SWOT Analysis
Please write down the report based on the instructions.
- You are writing to manager/management
- Assume he knows all about
- The situation and the alternatives
- Your qualifications
- Give the minimum amount of information needed to show
- That your recommendation is the best solution
- No full background analysis
- May brieflymention key points that will relate to your analysis and recommendations
- For example, goals
- Brief description of each alternative
- Just listing the alternative may be enough
- Evaluation of alternatives
- Financial (bottom line only)
- Qualitative – briefer than in case analysis
- Match with goals
Treasure Trophy Company (Treasure) is a company that is well-known for creating trophies of different shapes and sizes. Designed for awarding reasons, these trophies are suitable for use in a variety of sports, enterprises, and celebratory gatherings. In order to manufacture the Treasure Trophy, a three-step procedure is used: shaping, finishing, and assembly. Because all of the items that are created are customized, a task order system of cost accumulation is employed instead of a conventional cost system to keep costs under control. Currently, the firm is in the process of establishing the selling pricing for orders placed with the Royal Golf Club. As a result, it is important to determine which aspects should be taken into consideration when quoting the Royal Golf Club instructions. In order to achieve suitable expenses, it is necessary to allocate fixed and variable costs appropriately.
The goal of this report is to determine the manufacturing costs associated with completing the order so that Mr. Bob Morden may offer competitive quotations on the order before a final decision is made by the Royal Golf Club on whether or not to proceed. Additionally, this report will outline the elements that should be considered throughout the pricing process, as well as the price that should be given on the order itself.
· These three departments are in charge of keeping track of all of the direct charges.
· Why Customized orders provide you a competitive edge over rivals that only offer basic items.
· All three production divisions are housed in the same building as the offices, material storage, shipping, and receiving departments, which reduces overhead expenses and increases efficiency.
· It is estimated that the corporation spends more money on indirect charges than it does on direct expenses. As a result, overhead expenses will be greater than usual.
· There is a single supervisor who manages all three divisions.
· Information on administrative costs is lacking. As a result, management does not have a complete understanding of administrative expense information.
· A number of firms competed for this contract, and the pricing were established within a restricted competitive range to ensure fair competition. If Treasure Trophy can reduce its costs, it will be able to increase market share more quickly.
· Treasure operates on the basis of a task order system with cost accumulation. The fact that Treasure's production process is separated into three sections allows it to accommodate certain customized requests for some of the company's clients.
· It is possible to launch a new product line (medals).
· The demand for trophies may drop as a result of the availability of replacement items such as medals. Substitute goods are items that have characteristics and applications that are similar to those of another product.
· In addition, the Treasure Trophy is susceptible to new competitors since there are only a few organizations fighting for this industry.
· The greater the number of rivals, the cheaper the price. Profits will be reduced as a result of lower prices.
According to the facts supplied by this example, the direct labor expenditures were immediately deducted from the budget. Direct material expenses are assigned to the forming department since direct material costs are not included in the costs of the other two departments. Because of a lack of information in the case, it is possible to assign administrative expenditures evenly among the three departments involved.
The factory overhead expenses should be apportioned in accordance with the expenditures incurred by each department in the production. Because the supervisor is responsible for the operations of all three departments, the expenditures of the supervisor are distributed equally. The rent for the building is calculated in square feet, and the lighting and heating costs for each department should be calculated in proportion to the size of the department's floor plan. Because only two departments have machinery, the power and maintenance expenditures might be divided to the forming department and the finishing department, respectively.
Using the variable cost method, we can think about a more accurate and detailed allocation of each cost (production and non-production costs) to the appropriate location in the production process. It can be seen in the following table that the job cost sheet for Royal Golf Club would total $2,238.34, which is the total amount of money spent on the project. Because this method is more appropriate for products tailored to customers by Treasure when compared to the first method, it should be used instead of the first method whenever possible.
Due to the fact that only expenses that can be linked to the cost of each individual unit manufactured are included in the estimate, the Royal Golf Club should accept the Treasure Trophy Company's price based on the Fixed and Variable Cost approach. The corporation should also focus on methods to reduce expenses because of the many rivals in the industry. Training personnel, giving improved tactics for stocking the inventory and reducing inventory shortages, and cutting material prices may all help to reduce expenses and increase profitability.
Additionally, the firm must have a strategy in place to avoid, discourage, and identify fraud. Separation of responsibility and segregation of labor should be implemented across three departments in order to reduce any possible dangers.