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Allocation of Marks

The assignment must be completed as a group assignment for face to face students. Distance students have the option of doing it as a group or can also submit as an individual assignment, if you are unable to form a group online. Face to face students will be allocated into groups of 4-5 members by your respective Lecturer. Distance students can form groups themselves via the discussion forum on Moodle.

Before starting this assessment please read information provided in the Plagiarism and Academic Misconduct tab on Moodle. Students are to exhibit knowledge of the subject matter by demonstrating:

Demonstrating accuracy in accounting calculations.  Understanding and the ability to analyse and interpret the information from the calculations undertaken. Breadth of quality of analyses and providing appropriate guidance to management decision making. Communication – use of appropriate grammar and the use of appropriate format. Correctly using the APA referencing system to cite academic sources in-text and in the reference list. Sufficient sources used – minimum of 4-6 references.

Allocation of marks Please use the marking criteria sheet provided separately as a guideline for how marks will be allocated. Please ensure that you use the correct referencing style (APA style) as stated in the Unit Profile.

Formatting You are required to consider the case study provided under the Assignment tab below and write an executive report using Power Point. Your report should be set out in an appropriate format under the following headings:

1. Executive summary – one page – an overview of the important issues and their background, and providing a summary of your findings. 2 2. Analysis – details of the analysis undertake and the results. All calculations should be shown. 3. Findings – detail and justify your findings from the analysis. Take care to recognise and describe any limitations. 4. Action items/limitations – detail the limitations from the analysis. Identify potential areas for actions to be undertaken by the organisation. 5. The report must not exceed 8 Power Point Slides (excluding references and appendices, if any) using the Times New Roman Font, font sizes between 16- 18

Submission requirements You must submit your assignment in Power Point format electronically through the secure upload facility in the Moodle system. Please do not email your assignment to your lecturer or the Unit Coordinator. Please ensure all details are complete in the Cover sheet and ensure that it is the FIRST page of your assignment. These are the minimum requirements as outlined in the marking criteria available on the moodle site. However, students should note that satisfactorily meeting the minimum requirements will typically only result in the minimum pass grade being awarded. Higher grades will be awarded for students that exceed these minimum requirements. See the marking criteria for further details.

Formatting

Assignment questions Maharjan Manufacturing Pty Ltd is a medium-sized manufacturing company with its administration office based in Sydney, NSW. It has been operating since 1990 and manufactures generators. The strategy of Maharjan is to provide environmentally safe generators. It has two manufacturing plants that are based in Coffs Harbour and Port Macquarie, NSW. Coffs Harbour commenced manufacturing in 1990, while Port Macquarie commenced operations in 2005. The following information are available for the two manufacturing plants.

The Coffs Harbour plant’s production rate is 320 generators per day, while Port Macquarie is 400. The normal and maximum annual capacity usage at both plants is 240 days and 300 days. Other details include:

Selling Price $450.00 $450.00 Manufacturing variable cost per unit $216.00 $264.00 Manufacturing fixed cost per unit 90.00 45.00 Marketing variable cost per unit 42.00 42.00 Marketing fixed cost per unit 57.00 43.50 Total cost per unit 405.00 394.50 Operating income per unit $45.00 $55.5

Fixed costs per unit are calculated based on a normal capacity usage consisting of 240 working days. This includes all fixed costs. Overtime charges increases the manufacturing variable costs when the number of working days exceeds 240. This increase is by $9.00 per unit in the Port Macquarie Plant and $24.00 per unit in the Coffs Harbour Plant.

The Manager of Maharjan, Mr Raj Maharjan wants the production and sales increased in 2018. He has asked Mr Greg Mumford, the management accountant to work out the ideal number of generators to be manufactured to maximise production in 2018. Mr Mumford wants to take advantage of the higher operating income at the Coffs Harbour plant. He decides manufacturing of 96,000 units at each plant resulting in a plan in which Coffs Harbour would operate at a maximum capacity (320 units per day x 300 days) and Port Macquarie operates at its normal volume (400 units per day x 240 days).

Assume you are Mr Mumford, and prepare a report to the Manager to advise the results of your analysis in taking advantage of the higher operating income at the Coffs Harbour plant. Your report should include the following: 1. Show how you calculated the contribution margin per unit under normal production and under overtime production. 2. Show how you identified the break-even point for both the plants. 3. Show how you determined the operating income, if 96,000 generators are manufactured at each plant. Show, how the production of 192,000 generators should be allocated between the two plants to maximise the operating income for Maharjan Manufacturing Pty Ltd.

Allocation of Marks

uFrom the overall evaluation of the expenses and revenues contribution margin per unit is derived for the both production facilities under normal and overtime production.

 The calculation indicate that use of Port Macquarie is much beneficial for the company rather than Coffs Harbour, as it increases cost of production.

The limitation is derived in the assessment, which is compensated with actions to reduce the negative impact of the identified limitations.

Calculating the contribution margin per unit under normal production and under over time production

Contribution margin per unit under normal production

Particulars

Port Macquarie

Coffs Harbour

Selling Price

 $ 450.00

$ 450.00

Manufacturing variable cost per unit

 $ 216.00

 $ 264.00

Marketing variable cost per unit

 $ 42.00

 $ 42.00

Contribution margin (Revenue - Variable)

 $ 192.00

$ 144.00

Particulars

Port Macquarie

Coffs Harbour

Selling Price

 $ 450.00

$ 450.00

Manufacturing variable cost per unit

 $ 216.00

 $ 264.00

Marketing variable cost per unit

 $ 42.00

 $ 42.00

Extra variable cost

 $ 24.00

Contribution margin (Revenue - Variable)

 $ 192.00

$ 120.00

Particulars

Port Macquarie

Coffs Harbour

Fixed cost manufacturing

       $ 10,800,000

         $ 3,456,000

Fixed cost marketing

          $ 6,840,000

         $ 3,340,800

Total fixed cost

      $ 17,640,000

         $ 6,796,800

Contribution margin

$ 192.00

$ 144.00

Breakeven point (Fixed cost / contribution margin)

  73,500.00

 47,200.00

Particulars

Port Macquarie

Coffs Harbour

Fixed cost manufacturing

 $ 8,640,000

 $ 4,320,000

Fixed cost marketing

 $ 5,472,000

 $ 4,176,000

Total fixed cost

 $ 14,112,000

 $ 8,496,000

Contribution margin

 $ 192.00

$ 120.00

Breakeven point (Fixed cost / contribution margin)

 73,500.00

 70,800.00

Selling Price

 $ 43,200,000

 $        43,200,000

Manufacturing variable cost

 $ 20,736,000

 $ 25,344,000

Manufacturing fixed cost

 $ 8,640,000

 $ 4,320,000

Marketing variable cost

 $ 4,032,000

 $ 4,032,000

Marketing fixed cost

 $ 5,472,000

 $ 4,176,000

Extra variable cost

 $ 2,304,000

Total cost

 $ 38,880,000

 $ 40,176,000

Operating income

 $ 4,320,000

 $ 3,024,000

Selling Price

 $ 51,840,000

 $ 34,560,000

Manufacturing variable cost

 $ 24,883,200

 $  20,275,200

Manufacturing fixed cost

 $ 10,368,000

 $    3,456,000

Marketing variable cost

 $ 4,838,400

 $    3,225,600

Marketing fixed cost

 $ 6,566,400

 $    3,340,800

Extra variable cost

 $ 1,036,800

Total cost

 $ 47,692,800

 $ 30,297,600

Operating income

 $ 4,147,200

 $ 4,262,400

Findings

From the overall evaluation it could be understood that conducting higher production in Coffs Harbour plant will only increase expenses of the company, while declines the operating income generated from the operations. In addition, the total operating income after the increment in production process has relevantly declined, which was preciously not present during the normal process.

Consequently, the over usage of Coffs Harbour plant needs to be omitted, as extra variable expenses are incurred due to the over use of the facility. Furthermore, the calculation sheds light on the low usage, which is been conducted on Port Macquarie.

Therefore, the decline in production of generators on Coffs Harbour needs to be conducted, while increment in production can be done on Port Macquarie. This move could help in improve the level of production while reduce the cost incurred from production.

The major limitations that could arise from the analysis is the transportation cost of finished goods, which is not considered in the calculation. The evaluation of other overheads cost also needs to be evaluated, as it might increase the expenses from production function (Hatch et al., 2017).

Action items/limitations

The major limitation that could be identified from the overall analysis is the usage of Coffs Harbour facility for increased production units, which is directly affecting the overall production cost of the company. With the continuous production of in Port Macquarie the identified limitation of high expenses can be reduced.

In addition, the second limitation could arise from the non-evaluation of transportation cost of finished goods from the facility to stores. The inclusion of cost could eventually help in detecting the expenses and income generated from the production in both facilities.

References

van Asseldonk, M., van Wagenberg, C. P. A., & Wisselink, H. J. (2017). Break-even analysis of costs for controlling Toxoplasma gondii infections in slaughter pigs via a serological surveillance program in the Netherlands. Preventive veterinary medicine, 138, 139-146.

Hatch, M. D., Daniels, S. D., Glerum, K. M., & Higgins, L. D. (2017). The cost effectiveness of vancomycin for preventing infections after shoulder arthroplasty: a break-even analysis. Journal of shoulder and elbow surgery, 26(3), 472-477.

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2020). Analysis Of Manufacturing Operations And Sales Strategies For Maharjan Manufacturing Pty Ltd. Retrieved from https://myassignmenthelp.com/free-samples/acct-20076-practical-and-written-assignment.

"Analysis Of Manufacturing Operations And Sales Strategies For Maharjan Manufacturing Pty Ltd." My Assignment Help, 2020, https://myassignmenthelp.com/free-samples/acct-20076-practical-and-written-assignment.

My Assignment Help (2020) Analysis Of Manufacturing Operations And Sales Strategies For Maharjan Manufacturing Pty Ltd [Online]. Available from: https://myassignmenthelp.com/free-samples/acct-20076-practical-and-written-assignment
[Accessed 21 June 2024].

My Assignment Help. 'Analysis Of Manufacturing Operations And Sales Strategies For Maharjan Manufacturing Pty Ltd' (My Assignment Help, 2020) <https://myassignmenthelp.com/free-samples/acct-20076-practical-and-written-assignment> accessed 21 June 2024.

My Assignment Help. Analysis Of Manufacturing Operations And Sales Strategies For Maharjan Manufacturing Pty Ltd [Internet]. My Assignment Help. 2020 [cited 21 June 2024]. Available from: https://myassignmenthelp.com/free-samples/acct-20076-practical-and-written-assignment.

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