# Accounting Information Systems

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

## Essay Preview: Accounting Information Systems

Report this essay
Page 1 of 5

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 EX1001Assembly 2000 0 2000 5000 Model EX1002Assembly 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 EX1001Assembly 4000 0 4000 5000 Model EX1002Assembly 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

...

...