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Accounting Information Systems

Essay by   •  May 18, 2017  •  Research Paper  •  1,188 Words (5 Pages)  •  1,598 Views

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First, all datas are imported onto the new spreadsheet. With the data remained unchanged, the machine hours for each department to produce EX1001 and EX1002 are multiplied with their quarterly output. This gives us a total machine hours required by each department. For labour hours, the same procedure applies and derive at total labour hours required by each department. Then, the total machine hours and labour hours are used to multiply their costs per hour respectively for all departments. In summary, these are the original data provided by the company.

To obtain the new optimized values, a solver is applied. Solver is a built in add on for Microsoft Excel where you could enter all your data and it will calculate a new optimized value. Hence, it is calculated that the new quarterly output should be increased from 2500 to 3000.
COMPARISON OF TOTAL MACHINE HOURS

Model

Quarterly Output (Before Solver)

Quarterly Output (After Solver)

EX1001

1000

2000

EX1002

1500

1000

Total

2500

3000


Table 1.1. Total quarterly output (before) and (after) solver.

Before Solver


Machine Hour
EX 1001


Machine Hour
EX1002


Total


Total machine hours available for the quarter

Engine Assembly

1000

3000

4000

4000

Metal Stamping

2000

3000

5000

6000

Model EX1001
Assembly

2000

0

2000

5000

Model EX1002
Assembly

0

4500

4500

4500

5000

10500

15500

19500

After Solver


Machine Hour
EX 1001


Machine Hour
EX1002


Total


Total machine hours available for the quarter

Engine Assembly

2000

2000

4000

4000

Metal Stamping

4000

2000

6000

6000

Model EX1001
Assembly

4000

0

4000

5000

Model EX1002
Assembly

0

3000

3000

4500

10000

7000

17000

19500

Table 1.2. Total machine hours (before) and (after) solver.

By comparing the tables above, we could conclude that there is a total of 19500 machine hours available. However, with the current production plan, Forley is only engaging a total of 15500 machine hours, leaving a redundancy of 4000 hours not utilized.

Q1 (b) With reference to the “New Output version 1” table and “New Output version2” table, Forley’s Hightech can simply change their new production schedule to 2000 units of EX1001 and 1000 units of EX1002, or 2500 units of EX1001 and 500 units of EX1002. Despite the increase in total costs in contrast with the current production scheme, the increase in profit further suggest that Furley should definitely change their production scheme. However, it is evident that version 1 is more profitable than version 2 by 125000. Therefore, it is mandatory for Furley to change their production scheme to to produce 2000 units of EX1001 and 1000 units of EX1002, which utilizes the resources as well as more profitable.


Model

Quarterly Output (Before Solver)

Quarterly Output (After Solver)

EX1001

1000

2500

EX1002

1500

500

Total

2500

3000


Table 1.3. New total output (before) and (after) solver

Solver Output Version 1

Total Variable Cost
(£)

Total Fixed Cost
(£)

Total Revenue (£)

Profit
(£)

Model EX1001

60,300,000

25,000,000

80,000,000

4,800,000

Model EX1002

27,900,000

38,000,000

Solver Output Version 2

Total Variable Cost
(£)

Total Fixed Cost
(£)

Total Revenue (£)

Profit
(£)

Model EX1001

73,375,000

25,000,000

100,000,000

4,675,000

Model EX1002

13,950,000

19,000,000


Table 1.4. Profit comparison for Solver Output Version 1 and Version 2

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