Assignment Type: Individual

FARR CERAMICS PRODUCTION DIVISION: A BUDGETARY

ANALYSIS

Case Brief

This case study is based on a manufacturing company called FARR Ceramics,

headquartered in Dhaka, its factory situated in Gazipur and is directly monitored by the

Dhaka head office. The case focuses on a particular order for a certain special type of

ceramic cup exported periodically and the issues revolving around delivering orders and

keeping costs related issues at bay. Also, the case provides an opportunity to prepare

budgets based on real-life cost figures and thereby appreciating the intricate details of

Management Accounting

Learning Obiective

After the end of the case, students will be able to

Calculate per unit variable and fixed cost allocated to production.

Calculate unit cost of production and shipping

Prepare flexible budget

Prepare a flexible budget performance report

Evaluate a flexible budget performance report

Compute direct material price and quantity variance

Compute direct labor rate and efficiency variance

Prepare a sensitivity analysis

Assignment Questions

1. Use the budget data to calculate the per-unit fixed and variable cost allocated to

production. What was the actual cost per unit of production and shipping?

Draft a flexible budget based on the data provided.

3. Prepare a flexible budget performance report.

4. The factory accountant's performance analysis report has been presented to Mr.

Rahman. Using Table I, comment on the findings. Suggest areas of improvement

before it is sent to the head office of FARR ceramics that the manager may like to

be reflected in this analysis. (Hints: it might be useful to look into the material

price and quantity variances and labor rate and efficiency variances)

5. What is the implication on non-variable manufacturing cost if the decline in order

by Rosenthal continues? Prepare a sensitivity analysis considering the declining

order trend and suggest FARR Ceramics' possible ways of improving their

current performance.

Submission Guidelines

. It is an individual Report.

2. All reports should have a cover page.

3. All Reports should have Table of Contents

4. Give a brief description of the company along with its overall financial

performance

5. Comparisons can be done in tables.

6. Proper references of sources of information should be provided in text and in the

end.

7. Reports should be

I. Typed in Times New Roman Fomt

2. Spacing should be 1.5

3. Font size other than headings should be 12.

8. All reports will be checked for plagiarism. Any 2 reports, partiecularly in the

areas of qualitative analysis, found to be same will receive a zero.