Assignment requirment Essay

Colonial angle smart set (CTC) is a manufacturer of taps and fittings for the plumbing trade, located in Brisbane. The Company was established by Ken dormitory room in 1951, with a workforce of 10, to find out the needs of the post-war housing boom. Its ingathering straddle was fairly limited but the lodge had an excellent reputation for quality.Nowadays, CTC manufacturers an extensive shake off of high quality brass and chrome taps. The company is managed by Kens son, Michael, and employs 20 people. It has annual sales averaging round $1million. Although it has been consistently valueable, CTC has experienced increasing coerce from competitors since the early 1990s. The company uses a personify-plus approach to pricing but is having to stretch its markup constantly in order to exercise market share.Both Ken and Michael certified as engineers. The business is small and has neer been able to employ an accountant. Instead, a bookkeeper calculates monthly profit as sale s tax minus expenses. Prices are found on rough estimates of cost of direct natural and direct labour inputs plus a 50% markup.With the decline in profit and constant pressure on prices, Michael began to flavour uneasy about the way be and profits were calculated. The results for the month just end wereAdditional InformationThere was about no beginning inventory of raw material, work in process and sunk goods. At the end of the month, 10% of the materials purchased remained on hand, work in process amounted to 20% of the manufacturing be incurred during the month, and finished goods inventories were negligible. The factory occupies 80% of the premises, the sales area 15% and presidential term 5%. Most of the equipment is used for manufacturing, with scarcely 5% of the book value existence used for sales and administrative functions. about all of the electricity is consumed in the factory.The truck is used to deliver finished goods to customers.Michael house spends abo ut one-half of his time on factory management, one-third in the sales area and the rest on administration. indispensableMichael Hall asks you to review the results for the month and measure out the companys approach to estimating product cost. In doing so, you should 1. Comment on the cost classifications used in CTCs income statement. 2. enumerate the cost of goods manufactured and sold.3. Prepare a revised income statement for the month.4. Explain the differences mingled with your income statement and the one above. 5. If possible, suggest a more useful format for analysing costs than that used in your revised income statement. 6. assess the usefulness of product costs based on direct materials and direct labour. 7. venture recommendations for changes.