Question 03

Zunooj Pvt. Ltd, is a new small manufacturing firm of formals and casuals wears. Product range includes, shirts, T- Shirts (Full & Half sleeves), trousers, jeans etc. As it is a newly introduced firm, the burden is on the finance department to make an appropriate strategy for the newly born organization.

By considering all the factors, such as cost structure, condition of market, type of consumer, area of distribution, capacity of supply, product's demand etc. Managers has decided to follow the Cost Accounting for maintaining factory or Manufacturing A/c. It does not only includes physical stock-taking, but it also includes detailed & relevant cost figure of closing stock, raw material, work-in-progress and Finished goods, which help the manager to find out most suitable and accurate cost per unit. These also helped him to avoid material wastages, use of obsolete machinery, poor planning etc.

They took control over material, labor and overhead expenses, and started discussing day-to-day operations of business, so they can take remedial actions. Moreover, they have also introduced a cost reduction program combined with operational research and value analysis.

In your opinion which kind of operating and costing policy Zunooj pvt ltd. could implement to get the desired results? In addition to that, how above mentioned controls help organization to control material wastage & in minimizing overhead expenses?