The assembly department of a table manufacturer Introduction The purpose of this page is to demonstrate in as realistic a way as possible the collection and use of cost data. The setting is a table manufacturer; but to keep the demonstration as manageable as possible, only one department in the factory is demonstrated: the assembly department. We are using a table manufacturer because it is relatively simple for everyone to appreciate the process of manufacture of a table: it is based on a very limited range of materials and the processes involved are non complex. Most of us can visualize the manufacture of a table! The page begins with an overview of the manufacturing process and it does this by way of a simplified flowchart. We then take a look at the design of the table that we are working on and then build up the cost data that is the main purpose of this case study. By the end of this case we will have worked on standard costs per unit, standard cost reports. We will also consider actual data and prepare a performance report for the assembly department. The manufacturing process The following diagram simplifies the processes in our imaginary furniture factory.  The following diagram helps us to appreciate what our table looks like: its design and component parts.  The above diagram tells us about the component parts of the table and the following diagram shows us the side view of the table and the bill of materials for it.  We've seen what information we need now, we know how to gather it and now we'll take a look at how to present the information we have gathered. Working from the Assembly Department output records, the Bill of Materials and Stores Requisitions, we can prepare a report of materials used, tables completed and transferred to the Finishing Department and the efficiencies with which all of this work was completed.
Output for Week 1
Activity 1: based on the above information, prepare a report for Monday showing the Standard usage of materials and the standard cost of materials based on the production data given in the Output for week 1 table. Activity 2: once you have completed Monday's Standard Costing report, you receive Monday's actual materials usage and cost data. You are now required to present this information in as effective a way as possible for the Production Manager of this Furniture Factory.
Solutions NOTES: Teachers or trainers using this case may withhold these solutions until their students or participants have worked through the activities. Since the daily output is given for all other working days of the week, we could prepare performance reports for one or more of these days. We could then prepare a total weekly performance report along the lines we see here. For teachers using this exercise as a classroom exercise, they could consider splitting their group into sub groups and have each sub group prepare the report for one day; the whole group could then prepare the weekly report by combining all six of the reports they will then have. This is an ideal exercise for spreadsheet work. The tables that follow come without explanation: check all of the calculations and layouts for yourself. Satisfy yourself that what you see here is what you found. The tables may be used for discussion: now that we have these tables Solution 1
Solution 2
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Management Accounting, Cost Accounting, budgeting, Inventory Management,EOQ Economic Order Quantity, Process Management,
Sunday, July 17, 2011
Gathering and Reporting Cost Data
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