Accounting

Running head: Understanding value added services

Understanding value added services 2

Understanding value added services

Dennis Byrd

ITT-Tech

Business Management Capstone Project

Mwembe Company Limited is a manufacturing company limited that offers a variety of healthy and nutritious products. The products offered are essential to people with healthy lifestyles. For individuals planning a family gathering or a friend’s party where one requires to give them a special treat, Mwembe Company has the products to put the plan into action. The products on offer are the fresh juices, vegetables and fruit pudding. This is a global enterprise since it distributes its manufactured products all over the world. Mwembe manufactures leads in producing, marketing and distributing high-quality fresh and fresh cut fruits and vegetables. Mwembe Company is the leading producer and distributor of prepared fruits and vegetables, juices, beverages and healthy snacks across the United States.

Mwembe Company is dedicated to meeting current and future needs of consumers worldwide. To factor in their vision of becoming the world’s leading global supplier of healthful and nutritious, fresh and prepared food and beverages for consumers in every age level. Based on our strengths which include the wide range of fresh and prepared products. Having a vertically integrated supply chain, the global distribution capabilities and our world-class brand the company is in a position to maintain its customers. The company aim is manufacture products that satisfy today’s health and wellness-conscious consumer demands with a level of convenience fitting perfectly into their active lifestyle.

Value added products or services Mwembe Company offers to increase its profitability are; observing the off-season processing which includes, Fill local foods availability gap and fill farmers’ cash flow gap. The company should ensure that they develop value-added products from vegetables and fruits. Market those products locally. Create a product-development methodology to share with other small-scale producers.

or the developing Products there is the requirement for preliminary market analysis where a survey of the involved shareholders is carried out. Having conversation with the local people (farmers) and the consumers to find response on their product quality level. For Mwembe Company to Produce Value-Added Foods, their final recipe should be approval by Process Authority if necessary. Have also a recipe Checklist for Scheduled Process to find an easy way to track steps and document changes and corresponds to lot numbers.

Embracing a digital business model. Effective use of SCM tools within ERP or as a standalone application helps in control of a wide range of variables in a manufacturing company. These variables are purchasing costs, quality controls, pricing and speed to market. Having the right mix of Information Technology and processes contributes ultimately to a healthier and a higher margin business. Well equipped also to see and deal with unexpected changes throughout the supply chain. Digital business model contributes to customers and market visibility. The greatest benefit of SCM tools is access to accuracy, real time data from a disparate array of IT systems, databases and even social media feeds. The information is available on anytime and anywhere basis. Through the digital model, marketing is enhanced which facilitates profitability increase.

Synchronize ingredient self life to production cycles and minimize losses due to spoilage. While still leveraging volume discounts that makes sense. Since it deals with agricultural products, the suppliers’ quantity must be considered. On packaging of agricultural products and other materials and procuring efficiently (Kimmel, Weygandt, & Kieso, 2008). Any disruption that slows manufacturing processes leads to losses with involvement of perishable food. By observing on quantity and quality supplied, there is the aspect of added value on the product offered which in return increases profitability.

The company performance for the past one year of 2014 is analyzed below. To determine the prices to be set for the final products in accordance with the costs those are associated with the manufacturing process.

MWEMBE LTD

MANUFUCTURING ACCOUNT

FOR THE PERIOD ENDED 31st December 2014

$ $

Opening stock raw materials 20000

Add: purchased raw materials 30000

Carriage inwards (raw materials) 5000

Less: return outwards (raw materials) (4000)

Cost of materials available for production 51000

Less closing stock (R.M) (8000)

Cost of raw materials used 14000

Add direct labor 20000

Direct expenses 15000

Prime costs 92000

Indirect Expenses

Indirect labor 5000

Indirect expenses 4000

Heating expenses 3000

Lighting expenses 1000

Depreciation of factory equipment 4000

Depreciation of factory van 2000

Factory salaries/wages 5000

Factory rent 1000

Total indirect expense 25000

Add opening work in progress 10000

Less closing work in progress (5000)

Total Cost of production 122000

Manufacturing gross profit added (10%) 12200

Finished goods at transferred price 134200

To determine the prices to be set for the products it is necessary that a manufacturing account is created. This determines the costs associated with the manufacturing process. At this level the prices to be set is $134200 per item. The actual cost associated with the item is $122000.

The giveaway item in this case being the digital technology embraced where labor reduces to 5000, high percentage of manpower is replaced by automatic machines. To find the net profit having sales of $150000 by deducting the actual price to get $15800.

References

Duesterberg, T. J., & Preeg, E. H. (2003). U.S. Manufacturing: The Engine for Growth in a Global Economy. Greenwood Publishing Group,. Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2008). Accounting: Tools for Business Decision Making. John Wiley & Sons. Perrone, G., Bruccoleri, M., & Renna, P. (2005). Designing and Evaluating Value Added Services in Manufacturing E-Market Places. Springer Science & Business Media.