Management Accounting Report
TO : THE CHAIRMAN OF THE COMMITTEE
FROM : THE MANAGEMENT ACCOUNTANT OF THE COMMITTEE
DATE : 5TH JULY 2008
SUBJECT: FEW METHOD OR TECHNIQUE IN THE MANAGEMENT ACCOUNING CAN BE USE TO SOLVE THE MAJOR CRISIS FACING IN THIS COMPANY.
Nature of the company’s business
Rank Strategy Sdn Bhd (RSSB) was incorporated in Malaysia as a private limited company on (30th September 1996) under the Companies Act, 1965. The company’s principal activities are interior design, construction works and manufacturing base for future expansions.
RSSB specialized in Decoration Works and Turnkey Renovator Works for Offices, Restaurant, Hotels, Banks, Residential, Clubs and Resorts & Custom-made Built-in Wardrobe, Kitchen and Office Furniture.
Crisis / Problem In the first half year of 2008, this company facing a major financial problem. This company has limited fund resource to accept profitability project, to investing capital expenditure to expand their business and to employ skills workers to efficient the productivity. This problem was due to the lack of control and unconcern on the budget.
The receipt of sales was based on the percentage of the project’s work done and the contract life is 1 year. More than 80% sales are receives in few months later. The cash inflow might not enough to cover the cash outflow, because some project could be taken up to 3 months to complete. Furthermore, 50% of the purchase and sub contract was incurred during the project period. And some of the expenses were not properly spent.
At the meantime, the company manager decide to tender an interior design project in Subang Jaya, the contract sum is RM 1,640,000 (Ringgit Malaysia : One Million and Six Hundred Forty Thousand Only). If the company got the Letter of Award for that project, the project may start at the end of August 2008. This project will taken 2 months to complete. Then, the company has to make sure they have enough funds
FROM : THE MANAGEMENT ACCOUNTANT OF THE COMMITTEE
DATE : 5TH JULY 2008
SUBJECT: FEW METHOD OR TECHNIQUE IN THE MANAGEMENT ACCOUNING CAN BE USE TO SOLVE THE MAJOR CRISIS FACING IN THIS COMPANY.
Nature of the company’s business
Rank Strategy Sdn Bhd (RSSB) was incorporated in Malaysia as a private limited company on (30th September 1996) under the Companies Act, 1965. The company’s principal activities are interior design, construction works and manufacturing base for future expansions.
RSSB specialized in Decoration Works and Turnkey Renovator Works for Offices, Restaurant, Hotels, Banks, Residential, Clubs and Resorts & Custom-made Built-in Wardrobe, Kitchen and Office Furniture.
Crisis / Problem In the first half year of 2008, this company facing a major financial problem. This company has limited fund resource to accept profitability project, to investing capital expenditure to expand their business and to employ skills workers to efficient the productivity. This problem was due to the lack of control and unconcern on the budget.
The receipt of sales was based on the percentage of the project’s work done and the contract life is 1 year. More than 80% sales are receives in few months later. The cash inflow might not enough to cover the cash outflow, because some project could be taken up to 3 months to complete. Furthermore, 50% of the purchase and sub contract was incurred during the project period. And some of the expenses were not properly spent.
At the meantime, the company manager decide to tender an interior design project in Subang Jaya, the contract sum is RM 1,640,000 (Ringgit Malaysia : One Million and Six Hundred Forty Thousand Only). If the company got the Letter of Award for that project, the project may start at the end of August 2008. This project will taken 2 months to complete. Then, the company has to make sure they have enough funds