Project Management Techniques to Analyze Production

Question: Discuss about the Project Management for Techniques to Analyze Production. Answer: Introduction In the modern business environment, every companies operating requires advanced techniques to analyze production cost and cost of sales to undertake pricing decisions for their finished goods. The proper determination of selling price of the products is important for every organization so as to obtain profit for the business for the definite accounting period. Therefore, it is imperative to record the cost of production in detail. The related case study will find out the cost of manufacture and the cost of sales for the finished product of Carlton Speciality PLC, an organization concerned with the production of custom- based furniture. The accounting data of Carlton Speciality PLC needs to be computed in order to understand the manufacturing cost and the sales cost as most of the records regarding accounts are lost due to a minor fire incident within the company. The other requirements in this study include the analysis of process and job costing. In the books of Carlton Speciality PLC Schedule of Cost of Goods Manufactured Goods Sold for the month of July'2016 Particulars Amount Amount Direct Material Consumed : Raw Material Purchase 425000 Add : Opening Balance of Raw Material 3091000 3516000 Less: Closing Balance of Raw Material 850000 2666000 Direct Labor Costs : 864000 PRIME COST 3530000 Manufacturing Overhead 1350000 FACTORY COST 4880000 Opening Balance of Work-in-Progress 240000 Less: Closing Balance of Work-in-Progress 240000 0 COSTS OF GOODS MANUFACTURED 4880000 Opening Balance of Finished Goods 320000 Less: Closing Balance of Finished Goods 1200000 -880000 COST OF GOODS SOLD 4000000 Add: Profit Margin @50% 2000000 SELLING PRICES 6000000 Workings: Dr. Accounts Payable A/c. Cr. Date Particulars Amount Date Particulars Amount 30-Jun To, Bank A/c. 430000 1st July By, Balance B/f 70000 By, Purchase of Raw Material A/c. 425000 30th June By, Balance C/f 65000 495000 495000 Dr. Raw Material A/c. Cr. Date Particulars Amount Date Particulars Amount 1st July To, Balance b/f 3091000 30th June By, Work-in-Progress A/c. 2666000 To, Accounts Payable A/c. 425000 30th June By, Balance c/f 850000 3516000 3516000 Dr. Finished Goods A/c. Cr. Date Particulars Amount Date Particulars Amount 1st July To, Balance B/f 320000 By, Cost of Goods Sold A/c. 1786000 To, Work-in-Progress A/c. 2666000 30th June By, Balance C/f 1200000 2986000 2986000 Dr. Cost of Goods Sold A/c. Cr. Date Particulars Amount Date Particulars Amount 30th June To Finished Goods A/c. 1786000 To Direct Labor Cost A/c. 864000 To, Manufacturing Overhead A/c. 1350000 30th June By, Income Statement 4000000 4000000 4000000 Dr. Work-in-Progress A/c. Cr. Date Particulars Amount Date Particulars Amount 1st July To, Balance B/f 240000 By, Finished Goods A/c. 2666000 To, Raw Materials A/c. 2666000 30-Apr By, Balance C/f 240000 2906000 2906000 Dr. Manufacturing Overhead A/c. Cr. Date Particulars Amount Date Particulars Amount 30th June To Bank A/c. 1350000 By, Cost of Goods Sold A/c. 1350000 1350000 1350000 2. In the books of Carlton Speciality PLC Income Statement for the month of July'2016 Particulars Amount Amount Sales Revenue 6000000 Cost of Goods Sold -4000000 Gross Profit 2000000 Selling Administrative Cost -400000 Net Income before Interest Tax 1600000 3. The difference between Job Costing and Process Costing are as follows: Job Costing Job costing refers to the computation of cost of orders and work agreements, which are evaluated according to the customers demand. It is a customized way of production business function because this process analyzes every unit of operations individually. The job costing evaluation is done by calculating single job operations individually. The cost center for job costing is concerned with only the job performance and there is no transfer of costs from one individual unit to another. This method is heterogeneous in nature as every work function in this method is non-identical in nature. The essential feature of this technique is that the cost in this method is calculated at the end after the completion of the whole job (DRURY 2013). This method is mostly suitable for the organizations who manufacture goods according to the demands of the customer and the cost reduction from the orders is less in this type of technique. Process Costing Process Costing refers to the method in which the costs are incurred on the total number of operations and process undertaken in an enterprise. The manufacturing function in this process takes place in a standardized manner because this function moves according to a stipulated guideline for operations. Process costing determines all the costs together in the beginning of the process and then allocates to the various division of the manufacturing units. The cost center in this method involves a process or mechanism. The cost associated with any work also gets migrated with the work when the commodity moves from one processing unit to the other. This technique is an ongoing process function and so the commodities manufactured are similar in nature having identical characteristics and thus losing their individuality. In process costing, the total cost of production is computed at the end of the manufacturing period. The process is ideal for firms who are mass producers of any product as this method is a continuous one without any interruptions and the level of cost reduction is higher in this technique thus giving a competitive edge to the organizations (DRURY 2013). 4. According to the given question, monthly production report is an example of Periodic inventory system. This is because monthly production report refers to systematic and periodic up gradation of inventory system after every month. It is known that periodic inventory system is the process of updating records of the inventory after any specific time-period example after a quarter, month or year (Chołodowicz and Orłowski 2015). Thus it is for certain that monthly production report is an example of periodic inventory system. Conclusion The above questions gives out the schedule for cost of goods produced and cost of goods sold of the firm Carlton Speciality PLC to determine the missing information of accounts due to loss in fire. It also finds out the difference between process and job costing and finds out that monthly production report is an example of Periodic inventory system. Reference List Chołodowicz, E. and Orłowski, P., 2015. A periodic inventory control system with adaptive reference stock level for long supply delay.Measurement Automation Monitoring,61. DRURY, C.M., 2013.Management and cost accounting. Springer.