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Colin Drury, Management and Cost Accounting - Dumbellow Ltd Dumbellow Ltd Stan Brignall, Aston Business School The Board of Dumbellow Ltd be meeting on the 23rd January to discuss the draft calculate for 2000/1, some two months to begin with the start of that year. The company produces trine industrial valves which are incorporated into equipment used in the crude and Gas industry. The draft income statement is as follows: Product X £k Sales 100k units at £15 80k units at £25 120k units at £10 Materials Labour Overheads Profit/(Loss) 300 700 225 1225 275 cd 800 360 1560 440 1500 2000 1200 480 750 330 1560 (360) 4700 1180 2250 915 4345 355 Product Y £k Product Z £k Total £k The Board are unhappy with this planned matter in two respects: they had hoped for a total lolly of at least £400k to meet their required 20% bring to on capital; and they are unhappy about the gain ground deterioration of Product Z, their oldest product, which on current plans would move from existence marginally unprofitable this year to highly unprofitable next. Responses to the bunk varied. Paul Burns, the recently-appointed Financial Controller who compiled the budget, thought that the best resolution would be to stop devising product Z.

He argued, K directing the disappointing results this budget contains, I took the liberty of doing some rough calculations before coming to this meeting. If we drop Z we can eliminate the bushel labour costs associated with it of £90k and sell the machinery specifically associated with it which, being old, is now fully-written off but would probably fetch £5K. There will, however, be redundancy costs which I estimate at £50k. Arthur Mitchell, the proceeds manager and oldest member of the management team, was outraged. He said, Thats typical of you accountants. Weve been making Z since the firm started twenty years ago and it stillness has steady sales. Also, some of the blokes making it have been with the company a long time. You knew what the situation looked like:... If you want to get a full essay, order it on our website: Orderessay

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