Case Study Mahir Industries
Mahir Industrial is a company that is well known for their exclusive design production of valves. The company is also known to be currently using the conventional costing system for their production of valves.
The conventional costing system is used to trace and as well as to accumulate all of the direct costs and then disseminates the indirect costs of a manufacturing process. And so in this case, it is known that Mahir Industrial’s conventional costing system is used firstly, in order to find out every manufacturing department’s product costs. Besides that, the company’s direct cost consists of valves, pumps and as well as flow controllers. Secondly, another reason why the company uses conventional costing system, is for them to be able …show more content…
5.0 Issues to be considered when adapting the proposed activity based costing system
There are a few issues that Mahir Industrial would need to consider when adopting the activity based costing system (ABC). Firstly, setting up an activity based cost system (ABC) would be pricey and as well as time consuming for the company. Moreover, if once Mahir Industrial has decided to adapt the ABC system, the company’s business activities will then have to be interpreted and all of the activities will need to be detached into individual form in order to attain the ABC system (Eileen Rojas, n.d).
Besides that, the ABC system would also require Mahir Industrial to have a consolidation of associated tasks at different levels, and this will then lead the company to process their procedure longer. Additionally, another problem that Mahir Industrial could also face with the adaptation of ABC system is that the company will also experience difficulty in determining and as well as selecting the pertinent types of drivers (Eileen Rojas, …show more content…
Siva Krishnan on the production mix
Mr. Siva Krishnan has a few concerns on the product mix. First and foremost, Mr. Siva urges for the company not to expand itself so fast and sudden. This is mainly because, the company’s profit has seemed to diminish assiduously, and this has cause chaos for the company. Moreover, another concern of Mr. Siva would be that there was a diminished of 2 percent of sales in the net income of pumps, where the actual percentage should be 10 percent. And so with this issue, Mr. Siva vigorously advocates that Mahis Industrial should be concentrating more on their coeval products of valves and as well as flow controllers.
Furthermore, with Mahir Industrial using the conventional costing method, Mr. Siva strongly does not advise the company to expand itself, and this is mainly because the company is currently not working with the extra costs that the company’s product have provoked as they are working with the estimated costs. Thus, it would be a better option or choice for the company to start off by amending o their products that they currently have, and then only decide or pursue whether or not to replace the products that have contributed
The conventional costing system is used to trace and as well as to accumulate all of the direct costs and then disseminates the indirect costs of a manufacturing process. And so in this case, it is known that Mahir Industrial’s conventional costing system is used firstly, in order to find out every manufacturing department’s product costs. Besides that, the company’s direct cost consists of valves, pumps and as well as flow controllers. Secondly, another reason why the company uses conventional costing system, is for them to be able …show more content…
5.0 Issues to be considered when adapting the proposed activity based costing system
There are a few issues that Mahir Industrial would need to consider when adopting the activity based costing system (ABC). Firstly, setting up an activity based cost system (ABC) would be pricey and as well as time consuming for the company. Moreover, if once Mahir Industrial has decided to adapt the ABC system, the company’s business activities will then have to be interpreted and all of the activities will need to be detached into individual form in order to attain the ABC system (Eileen Rojas, n.d).
Besides that, the ABC system would also require Mahir Industrial to have a consolidation of associated tasks at different levels, and this will then lead the company to process their procedure longer. Additionally, another problem that Mahir Industrial could also face with the adaptation of ABC system is that the company will also experience difficulty in determining and as well as selecting the pertinent types of drivers (Eileen Rojas, …show more content…
Siva Krishnan on the production mix
Mr. Siva Krishnan has a few concerns on the product mix. First and foremost, Mr. Siva urges for the company not to expand itself so fast and sudden. This is mainly because, the company’s profit has seemed to diminish assiduously, and this has cause chaos for the company. Moreover, another concern of Mr. Siva would be that there was a diminished of 2 percent of sales in the net income of pumps, where the actual percentage should be 10 percent. And so with this issue, Mr. Siva vigorously advocates that Mahis Industrial should be concentrating more on their coeval products of valves and as well as flow controllers.
Furthermore, with Mahir Industrial using the conventional costing method, Mr. Siva strongly does not advise the company to expand itself, and this is mainly because the company is currently not working with the extra costs that the company’s product have provoked as they are working with the estimated costs. Thus, it would be a better option or choice for the company to start off by amending o their products that they currently have, and then only decide or pursue whether or not to replace the products that have contributed