Accounting Management

Questions: (1). Explain with justifications your assessment of the Companys 2015 performance based on the data and information provided above. Show your computations supporting your assessment on an attachment. (2). Identify and explain with back-up data/justification how ABCLtd may be able to regain its lost market share and increase the share to 45% by 2021. Explain how your suggested action(s) will achieve the Companys objectives. Show your computations supporting your assessment on an attachment. Answers: (1). Computation of Profit Particulars X Y Total Sales (22*12000) 264000 (45*24000) 1080000 1344000 Less: Variable Costs (15*12000) 180000 (25*24000) 600000 780000 Contribution 84000 480000 564000 Less: Fixed Costs 450000 Profit 114000 Budgeted Cost Figures Budgeted figures of X Particulars Actual ($) Difference ($) Budgeted ($) Direct Material 4.5 (3.0) 1.5 Direct Labor 8.0 3.0 11.0 Overhead 2.5 - 2.5 Total 15.0 Budgeted Figures of Y Particulars Assumed ($) Difference ($) Budgeted ($) Direct Material 10.0 - 10.0 Direct Labor 12.0 (4.0) 8.0 Overhead 3.0 - 3.0 Total 21.0 Extra Costs (25-21) 4.0 Analysis In spite of making a profit during the year, there was a difference between the budgeted figures for both the products. It can be seen from the above calculations that for product X, the extra costs were set off against the reduction of labor costs. This signifies the efficiency of the labor employed along with optimum utilization of resources (Kaplan Atkinson, 2015). Therefore, the overall effect remained the same. The cost of direct materials increased by $2 and the company should search for other alternatives to procure materials. For product Y, the company is required to improve the nature and quality of the labor employed as extra labor costs increased the overall cost of production for the product. (2). In the give situation, increasing the market share of ABC Ltd can be achieved in the following manner: Reduction in the cost of production Better utilization of resources Employment of efficient labor Achieving economies of scale by lowering the selling price of the products The calculations performed above will enable the company to cut down its costs (DRURY, 2013). This will enable the company to lower its product price that in turn will help it to penetrate the market. Reference DRURY, C. M. (2013).Management and cost accounting. Springer. Kaplan, R. S., Atkinson, A. A. (2015).Advanced management accounting. PHI Learning.