The DJ-500 is a pistol that is favoured by many Olympic shooting competitors due to its low-cost
Question:
The DJ-500 is a pistol that is favoured by many Olympic shooting competitors due to its low-cost design. This case study focuses on the pistol's use in shooting competitions. Pro arms FACTORY makes no warranties on their DJ-500 pistols. Instead, they insist on sourcing the highest quality raw materials and craftsmanship. Due to the artisanal nature of the production process, they estimate their costs on capacity instead of historical costs or actual activity. Only the most reputable gun dealers can be found in the Pro arms factory marketplace. Their analysis suggests that only around 45-gun suppliers are in Australia and international trade restrictions make the export of firearms difficult and costly.
The following table relates to Proarms Ltd's performance data for 2019 and 2020:
Financial Data | 2019 | 2020 |
Customers | 35 | 40 |
Units produced and sold | 350 | 400 |
Selling price | $3,000 | $3,150 |
Direct Materials (kg) | 3000 | 3200 |
DM cost per kilogram | $19.50 | $20 |
Practical manufacturing capacity (units) | 450 | 450 |
Total conversion costs | $39,600 | $40,000 |
Conversion indirect overhead cost per unit of capacity | $88 | $90 |
Customer service capacity (customers) | 45 | 45 |
Total selling and customer service costs | $33,750 | $31,500 |
Selling and customer service cost allocation rate per customer | $750 | $750 |
Other performance data | ||
Staff training days | 50 | 85 |
Defective components returned to suppliers | 250 | 50 |
Deliveries to customers delayed due to supplier problems | 15 | $2 |
Direct Materials (kg) wasted due to production problems | 500 | 75 |
Hours spent in quality checks of direct materials received | 750 | 250 |
Turnover of staff | 10 | 5 |
Innovation workshop days for staff to attend | 2 | 10 |
Staff suggestions for improvements | 5 | 15 |
Sold items returned by customers | 150 | 125 |
Repeat orders by customers | 200 | 180 |
Positive reviews by shooters in online forums | 150 | 100 |
Provide and report comparative analysis for each of Pro Arms LTD's four balanced scorecard perspectives. Thus, include reconciliation of Pro Arms LTD'S profitability between 2019 and 2020, using the variances applicable to growth and productivity strategies.
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