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Hello! Need answers for all the sub-questions from a-e for this case study. Battle Computers Ltd (BCL) make laptop computers for use in harsh and
Hello! Need answers for all the sub-questions from a-e for this case study.
Battle Computers Ltd (BCL) make laptop computers for use in harsh and unpredictable environments. The company's primary customers are organisations like mining companies and security firms who require a laptop that can survive rough handling and can be made to their unique requirements. The company started as a basic laptop manufacturer, but had to find a niche market when its competitors grew much larger and BCL was no longer able to compete. It is now considered one of the best quality producers in this sector. A new chief executive officer (CEO) has been appointed who wishes to review BCL's financial control systems to get better information with which to make future decisions about the company. The CEO wants to begin by looking at the pricing of the laptops to ensure that BCL is not selling expensive products at the wrong price thereby compromising profit margins. Each laptop is individually specified by customers and pricing has traditionally been on a production cost plus basis with a mark-up of 45%. The company uses an absorption costing system based on labour hours in order to calculate the production cost per unit. The CEO is worried by the recent movement of its major competitors into BCL's market and so wants a report on the current costing system and any suggestions for improvement. The following information has been made available to aid your analysis Financial and other information for Battle Laptops Special order An order has been received from an important client which may lead to more business in the future if successful. The following information relates to that order. Units ordered 16 Required: The CEO has asked you to provide a report which addresses the following issues: (a) An evaluation of the current method of costing against an Activity Based Costing (ABC) system. You should provide illustrative calculations using the information provided on costs for 2020 and the special order. (b) What action management might take in the light of your results with respect to this order (c)The application of Activity Based Management (ABM) requires that management focus on each of the following: (i) Operational ABM; (ii) Strategic ABM; (iii) The implicit value of an activity'. Critically appraise the potential introduction of ABM at BCL, including how it relates to each of the three areas listed above, (d) BCL also manufactures and sells accessories for the laptops, such as protective covers and the most recent financial information for this division is outlined below: Prepare a table summarising the variable cost per unit and total fixed cost for each of the five cost headings above. (e) Finally, the CEO is aware of the terms Financial Accounting and Management Accounting but is unsure of the difference between the two and would like you to outline the main differences as they would relate to BCLStep by Step Solution
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