Lilac Flour Mills_Final

8/14/2019 Lilac Flour Mills_Final

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Name: Bhavinkumar Parmar, MAC-IIRoll No: 2010PGP084, Se !ion A

Assignment on Lilac Flour Mills

A"ou! #ila $lour Mill%:

#ila $lour Mill% &ro e%%e% 'hea! !o &ro(u e 'hi!e )lour, %u*i, 'holemeal

)lour, an( "ran+ In !erm o) &h %i al &ro&or!ion%, !he avera e iel( )rom a!on o) 'hea! i% .0 &er en! )or 'hi!e )lour, 10 &er en! )or %u*i, 10 &er en!)or 'hole meal )lour an( 20 &er en! )or "ran+

The production process : Plan! on%i%!e( o) %everal )loor% an( i% (ivi(e(in!o !'o &ar!%: i/ leanin %e !ion an( ii/ millin %e !ion+ hea! i% )e(!hrou h a "in in !he roun( )loor, 'hi h i% &a%%e( !hrou h (u%! an( ha))removal "u ke!% an( !hen !hrou h a !riour e ui&men! !o remove orn,roun( %ee(%,mai e an( %!one% )rom 'hea!+ I! i% !hen 'a%he(, (rie( an(%!ore( in a lean "in+

Cleane( 'hea! i% !hen &a%%e( !hrou h an a%&ira!ion- leanin mea hine'here i! i% "ru%he( an( !hen i! rea he% (ou"le roller mill+ hea! orn i%!hen &a%%e( !hrou h roller mill% an( &lan!%i)!er% %u e%%ivel un!il all )lour'a% 'on+ 3he "ran !ha! remaine( i% olle !e( " mean% o) "ran %e&ara!or+

3he en( &ro(u !% 'er &a%%e( !horou h 'oo(en hannel% !o !he roun()loor 'here !he 'ere olle !e( an( &a ke(+

Inventory Accumulation : #ila &ro e%%e( a"ou! . !on% o) 'hea!&er(a + 5ver !on o) 'hea! iel(e( a"ou! 0+2 !on% o) "ran 'hi h ome% !oa"ou! 6+2 !on% &er (a + hea! "ran 'a% &rimaril u%e( a% a!!le )ee( "live%!o k "ree(in en!er% 'here a% )lour, %u*i, an( 'holemeal )lour 'ereu%e( " (ire ! hou%ehol( on%umer% an( in(u%!rial uni!%+

Existing Joint Cost Allocation Method : An avera e uni! o%! )or ea h&ro(u ! 'a% arrive( a! " (ivi(in !he !o!al *oin! o%!% " !he om"ine(ou!&u! o) !he )our &ro(u !%+ 3he rea%on "ehin( !hi% 'a% !ha! in a% mu h a%all !he )our &ro(u !% 'ere o"!aine( " !he %ame &ro e%%+ 3he o%! o)&a kin , %ellin an( (i%!ri"u!ion in urre( a)!er !he %ievin %!a e 'a%i(en!i)ie( 'i!h in(ivi(ual &ro(u !% an( !rea!e( a% %e&ara"le o%!%+

Sellin &ri e% Co%! Pri e%Se&ara"leCo%!%

hi!e )lour R% 2100 R% 1870 R% 68Su*i R% 2480 R% 1870 R% 84

holemeal)lour R% 2000 R% 1870 R% 4 Bran :R%+ 1140+ R% 1870 R% 1.

Pro"lem% i(en!i)ie( )rom !he a%e:

1+ A% on e em"er 1, 196 , #ila $lour Mill% 'a% arr in aninven!or o) 2000 !on% o) "ran, 'hi h 'a% value( a! R%+ 6, 2,000


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2+ 3hi% i% "e au%e !he &ur ha%e o))er% ran e( )rom R%+1000 !oR%+1 70, 'hi h 'a% )ar lo'er !han !he !o!al o%! !ha! 'a% al ula!e(" !he )ollo'e( a oun!in &ro e(ure+

+ In !he urren! &ro e(ure, !he oin! o%!% in !he &ro e%% are allo a!e("a%e( on !he &h %i al uan!i!ie% &ro&or!ion o) !he ou!&u!+ Be au%eo) !hi%, 'e are e!!in a !o!al o%! o) R%+18.. &er !on )or "ran+

4+ ;en e i) !he are %ellin "ran a! !he marke! &ri e a! !he &ur ha%e&ri e% availa"le in !he marke!, !he 'ill in ur a lo%% o) aroun( R%+6.0 'hi h i% 'h !he are no! a"le !o %ell i!+ ;en e a lo! o) "ran i%%!ill le)! a% inven!or +

$rom !he a"ove &oin!%, i! i% evi(en! !ha! !he &ro"lem i% (ue !o !heallo a!ion o) !he *oin! o%!% "a%e( on &h %i al (i%!ri"u!ion+

Ran e o) &o%%i"le Solu!ion%: hen !here are !'o are more &ro(u !% !ha!un(er o !he %ame &ro e%% a! !he %ame !ime in !he our%e o) onver%ion,!he *oin! o%!% %houl( "e allo a!e( !o ea h o) !he &ro(u !% "a%e( on %omeallo a!ion "a%i%+

3he allo a!ion "a%i% an "e o) (i))eren! ! &e%:

1+ Physical Quantity method : 3hi% i% !he me!ho( urren!l )ollo'e(" #ila $lour mill%+ 3hi% i% no! iel(in !he re uire( re%ul!% a% 'een( u& allo a!in hi h o%! !o "ran an( %o no! a"le !o %ell i!+

3he ra!io o) !he &ro(u !% in &h %i al uan!i! &ro(u e( &erea h uni! o) 'hea! i% .:1:1:2 in !he or(er o) 'hi!e )lour, %u*i,'holemeal )lour an( "ran re%&e !ivel + Cal ula!ion o) Avera euni! &ro(u ! o%!


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!

3a"le I

Allo a!in !he *oin! o%!% in !he %ame &ro&or!ion, 'e an %&li!!he *oin! o%!% amon !he (i))eren! &ro(u !% "a%e( on !hi%&ro&or!ion+ A((in %e&ara"le o%!% !o !he *oin! o%!% 'ill ive!he !o!al o%! &er ea h &ro(u !+

3he %ellin &ri e i% a%%ume( !o "e !he marke! &ri e )or(i))eren! &ro(u ! a% o) no' in !he marke!+ 3he %ellin &ri e )or"ran i% a%%ume( !o "e R%+1140 &er !on+

3he &ro)i!a"ili!ie% o) (i))eren! &ro(u !% "a%e( on !hi% me!ho( are

!a"ula!e( in !a"le I

2+ (ales )alue Method :

In %ale% value me!ho(, 'e u%e !he %ale% value a% !he "a%i% )or

allo a!ion+

Pro(u !

Pro(u !ion in!on%

Sale%&ri e&er !on

Sale%>alue

oin! o%!allo a!e(on "a%i%o) %ale%value

oin!o%!

&er!on

Se&ara"leCo%!&er !on

3o!alCo%!&er!on

Pro)i!&er!on

3o!al&ro)i!

hile$lour 740 2100

11 4000 108 .2. 2006 68 2087 17 8274

Su*i 90 248022 200 21 287 2 60 84 2474 2. 2 77

holemeal$lour 90 2000

180000 162004 1911 4 1947 77 49 .

Bran 180 1140207200 19.087 1089 1. 1107 7 .2 7

9001642400 1..7000

21680

3a"le II

e allo a!e !he *oin! o%!% "a%e( on !he &ro&or!ion o) !heSale% value o) !he )our &ro(u !%


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3he )ollo'in !a"le-II ive% !he &ro)i!a"ili! o) (i))eren!&ro(u !% 'hen !hi% me!ho( i% a(o&!e(:

*+ ,et -eali.ation )alue/,-)0 method1

In NR> me!ho(, 'e u%e


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3a"le I>

Pro(u !

Pro(u !ion in!on%

Sale

%&ri e&er!on

Sale%>alue

oin! o%!allo a!e(on "a%i%

o)a%%umin " -

&ro(u !%

oin

! o%!&er!on


3o!a

lCo%!&er!on

Pro)i!&er!on

3o!al&ro)i!

hile$lour 740 2100

11 4000 1060100

1982 68

20.0 40

21680

Su*i 90 248022 200 217.40

2 9. 84

2480 0 0

holemeal $lour 90 2000

180000 16.940

19.. 4

2000 0 0

Bran 180 1140

20720

0 202 20

112

4 1.

114

0 0 0 900

1642400 1..7000

21680

3a"le: I>

hen %ome o) !he &ro(u !% are !rea!e( a% " -&ro(u !%, 'e&re%ume !ha! !he !o!al o%! o) !he " -&ro(u ! i% *u%! e ual !o!he %ellin &ri e o) i!+ r in o!her 'or(%, &ro)i! )or !he%e&ro(u !% i% ero+

;en e, 'hen 'e allo a!e !he *oin! o%!% !o !he (i))eren!&ro(u !%, 'e %ee !ha! !he allo! !he *oin! o%!% !o !he " -&ro(u !% %u h !ha! !he !o!al o%! o) !he%e e ual !heir %ellin&ri e+ 3he remainin o%!% are allo a!e( !o !he main &ro(u !'hi h i% !he 'hi!e )lour+

3he !a"e I> ive% !he o%! allo a!ion an( !he &ro)i!a"ili! )or!he (i))eren! &ro(u !% 'hen !hi% me!ho( i% u%e(

$+ Assuming only 7ran as 2y6product1

;ere, 'e a%%ume onl Bran a% " -&ro(u !+ 3he o!her !hree&ro(u !% namel 'hi!e )lour, %u*i an( 'holemeal )lour are

on%i(ere( a% main &ro(u !%

;en e, 'e allo a!e !he *oin! o%!% !o Bran %u h !ha! !he !o!alo%! o) Bran e ual% i!% %ellin &ri e+

3he remainin *oin! o%!% are allo a!e( !o !he !hree main

&ro(u !% "a%e( on !heir %ale% value+


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3a"le > ive% !he o%! allo a!ion an( &ro)i!a"ili! al ula!ion)or !he (i))eren! &ro(u !% "a%e( on !hi% me!ho(:

Pro(u !

Pro(u !ion in!on%

Sale%&ri e&er!on

Sale%>alue

oin!o%!

allo a!e( on"a%i% o)"ran a%a "&ro(u !

oin!

o%!&er!on


3o!alCo%!&er!on

Pro)i!&er!on

3o!al&ro)i!

hile$lour 740 2100

11 4000

106902.

1998 68

206. 24

12874

Su*i 90 2480

22 20

0 212 80

2 .

0 84

244

4 . 2.0holeme

al $lour 90 2000180000 161264

1904

196 .

7....

Bran 180 1140207200 202 20

1124 1.

1140 0 0

9001642400

1..7000

21680

3a"le: >

#+ Constant 8ross margin ,-) method1

In !hi% me!ho(, 'e al ula!e !he !o!al Gro%% mar in on all !he&ro(u !% !o e!her, an( 'e a%%ume !he %ame ro%% mar in )or(i))eren! &ro(u !%

5valua!in !he %olu!ion%:

3a"le >I ive% !he %ummar o) all !he al!erna!ive% (i% u%%e( a"ove an(!he ro%% mar in% al ula!e( )or (i))eren! me!ho(%:

"+ Physical Quantity method1

$rom !he a%e, i! i% lear !ha! !hi% me!ho( (oe% no! ive !he re%ul!%!ha! 'e e &e !+ e en( u& allo!!in a ver hi h o%! )or Bran+ So,!hi% i% no! !he a&&ro&ria!e me!ho(

Production)alueMethod

(ales)alueMethod

,et-eali.ation )alue

assuming *2y6products

Assuming7ran as 2y6product


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Pro(u!

Sale%&rie&er!on

3o!alCo%!

< Inven!or>alue/ &er!on

Gro%%Mar in

3o!al

Co%!< Inven!or>alue/ &er!on

Gro%%Mar in

3o!alCo%!

< Inven!or>alue/

&er!on

Gro%%Marin

3o!alCo%!< Inven!or>alue/&er !on

Gro%%Mar in

3o!alCo%!

< Inv

en!or>alue/&er!on

Gro%%Mar in

hile$lour

2100 1928 8+20@ 2087

0+60@ 2064

1+20@ 20.0

1+90@

206.

1+10@

Su*i2480 19 4 22@ 2474

1+10@ 2449

1+20@ 2480 0@

2444

1+70@

holemeal$lour

2000 1884 7+80@ 1947

2+60@ 1967

1+ 0@ 2000 0@

196

+10@

Bran1140 18..

-. +60@ 1107 @ 1127

1+ 0@ 1140 0@

1140 0@

3a"le >I

%+ (ales value method1

3hi% me!ho( i% "e!!er !han Ph %i al uan!i! me!ho( a% 'e (o no!

o"%erve an lo%% on an o) !he &ro(u !%+ Bu! i) 'e a(o&! !hi%me!ho(, 'e 'ill have ro%% mar in o) onl 0+6@ )or !he 'hi!e )lour,'hi h i% our main &ro(u !+ 3hi% mi h! au%e a on ern e%&e iall )or!he %enior mana emen!+

*+ ,et -eali.ation )alue/,-)0 method1

B !hi% me!ho( 'e are e!!in a oo( an( even &ro)i! mar in amonall !he &ro(u !%+ Al%o 'e are e!!in a (e en! 1+2@ ro%% mar in


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!hen i! lea(% !o an in rea%e in overall o%! o) !he 'hi!e )lour an(hen e (e rea%e% i!% mar in+ Al%o, !here 'ill "e a lo! o) vola!ili! in!he o%! allo a!ion ever !ime+

$+ Treating only 7ran as 2y6product1

$rom !he !a"le 'e an %ee !ha!, i) 'e a(o&! !hi% me!ho( 'e aree!!in a ro%% mar in o) a! lea%! 1+1@ on !he !hree *oin! &ro(u !%+

Al%o, !he inven!or o%!% o) !he !hree &ro(u !% "ear %ome o%!orre%&on(in !o Branalue me!ho(+ 3he rea%on "ein , in !he lon !erm, i! mi h!ha&&en !ha! !he %ellin &ri e o) Bran han e% an( i! lea(% !o a han e in!he Inven!or o%!% o) o!her &ro(u !% !oo+ So, !o avoi( vola!ili! in ourvalue%, 'e an o )or !he )ormer me!ho(+

#e%%on% )rom !he a%e:

$rom !he a%e anal %i%, 'e an i(en!i) !he )ollo'in &oin!% a% learnin %:

a/ hen mul!i&le &ro(u !% are &ro(u e( u%in !he %ame &ro e%%e%%imul!aneou%l , !he o%!% involve( in !he &ro e%% < oin! o%!%/ %houl("e allo a!e( a)!er hoo%in an allo a!ion "a%i% !o arrive a! !he ri h!

o%!% )or ea h &ro(u !+

"/ Ph %i al (i%!ri"u!ion me!ho( !hou h ea% !o im&lemen!, i! an "eu%e( onl 'hen !he &ro(u !% &ro(u e( )rom !he &ro e%% are o)

om&ara"le value+

/ e %houl( "e are)ul 'hen !rea!in %ome o) !he &ro(u !% a% " -&ro(u !%+ Sin e 'e 'ill "e allo a!in &ar! o) !heir *oin! o%!% !o !hemain &ro(u !%, !hi% in rea%e% !he inven!or o%!% o) our main&ro(u !, 'hi h re)le !% on !he "alan e %hee!+ So, 'e %houl( make%ure !ha! !here i% no %i ni)i an! im&a ! "e au%e o) !hi%+


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(/ $inall , 'e %houl( kee& in min( !ha! !he o%! allo a!ion o) *oin! o%!%%houl( no! au%e an han e in !he e onomi (e i%ion% o) !he )irm+So, 'hi h ever me!ho( 'e a(o&! %houl( no! have an im&a ! on !hemana erial (e i%ion% ma(e+ 3he%e me!ho(% %houl( "e vie'e( onl

)rom a oun!in &er%&e !ive+

Lilac Flour Mills_Final

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