ABC LLC manufactures computers and laptops that has a total assets of OMR 600,000, currently with 8 retail outlets in different regions of Oman and with a total of 1,200 employees. ABC manufacturing unit is in Sohar, Oman where one division deals with computers and the other division deals in laptops.

ABC LLC Financial statements figures for last five years have revealed that company has experienced continual growth in its sales revenue but net increase in profit figure is less as compare to the growth in sales revenue. Sales revenue for both products are on cash and credit basis. Receivables, closing inventory figures have shown an increase over the last five years effecting cash flow position and net profit.

Due to the current market conditions, the demand and customer requirement for product ‘laptop’ is much higher than ‘computer’. ABC LLC laptop manufacturing division deals with individual customer requests as well as takes bulk despatch orders from companies.

The division prepares a separate job cost card for each customer orders and based on the target, fixes the profit on cost plus mark up. For the financial year ended Dec 2019, the division expects a huge increase in production and sales.

The division has recruited you as a Management Accountant trainee and you have to work under senior Management Accountant of ABC LLC.

For the year ended 31.12.2019,budgeted information for the management accounting system and sales price calculation for a unit of Laptop is as follows:-

	OMR		OMR
Building rent per month	7,000	Depreciation cost on property ,plant and equipment (PPE) per month	500
Labour cost per unit	50	Warehouse and distribution cost per unit	10
Materials cost per unit	110	Insurance cost per year	20,000
Finishing cost per unit	40	Factory staff Salary per month	3,000
Interest cost per year	12,000	Quality Checking cost per unit	25
Utility cost per quarter	1,900	Marketing cost per month	1,000

Additional information:

The division plans is to manufacture and sell 24,000 units of laptops for the financial year ended Dec 2019 at the cost plus 25% using Full cost pricing Policy.

ii. To manufacture and sell 24,000 units of laptops for the financial year ended Dec 2019 ABC LLC buys certain raw materials for laptops from a supplier. An annual consumption of raw materials during the year is 24,000 units. The company’s inventory carrying cost is estimated OMR 3 per unit and the ordering is OMR 40 per order.

iii. On 10th Dec 2018, CFO of the company has called for a meeting to discuss various pertinent aspects including the strategy of cost minimisation and critical evaluation of how Management Accounting systems and Management Accounting Reporting is integrated with ABC LLC organisational process.

The senior Management Accountant will be attending the meeting and is preparing for the same and has also delegated the responsibility to you for preparing and presenting report to him and other finance department team members before 10^th Dec 2018.

As a Management Accountant trainee, using financial management information of ABC LLC given in case scenario presented above , you are required to critically evaluate how Management Accounting Systems and Management Accounting Reporting is integrated within ABC LLC organizational processes. This will be your first presentation in the company. On the agenda the above matter will be presented by you before 10th Dec 2018, from 4 pm to 4:30 pm. The meeting follows a rule of 20 mins presentation time and 10 minutes for questioning or clarification on the presentation.

Answer rating: 100% (QA)

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