Performance Management & Control

– The Harvard Referencing System must be used. The Wikipedia website must not be referenced in your work.

– On successful completion of this assignment you will be able to:

1. 
Identify and critically analyse principles and trends in Performance Measurement and Control. 


2. 
Determine the different budgeting techniques and critically evaluate their use in short term decision making 


3. 
Analyse the current approach to performance measurement and control in a selected global organisation and critically appraise suggestions for improvement of current practices 


4. 
Critically appraise the application of performance criteria in Not for profit and Public sector organisations. 


Your Task

Part A: Performance Appraisal (50%)

Suppose you have recently been contracted as a financial consultant to a London-based engineering company, Alpha Products Plc. The company uses three components as part of their production process, namely, A, B and C. The budgeted production output for the forthcoming year is to produce 10,000 of each of the three components.

The variable production cost per unit of the final product is as follows:



 Only 112,000 hours of machine time will be available during the year, and a sub-contractor has quoted the following unit prices for supplying the three components: A £72.50; B £100 and C £88.

Required:

Write a short report, intended for CEO of Alpha Products Plc, William Smith, who is not an accountant, advising him of the following:

(a) Using the above financial data provide calculations which support your advice to the company on whether it should produce the three components or outsource them.          (20 marks)

(b) Explain the use of the principle of opportunity cost and why cost- minimization and profit maximization are compatible concepts and include a table showing the total variable cost of your selected production or purchasing plan. (12 marks)

(c) Critically discuss the practice of outsourcing and the problems you consider may be associated with this practice. (12 Marks)

(d) Structure and presentation of the report (6 Marks)

Total marks 50

Part B: Methods of Overhead Allocation (50%)

A manufacturing company, based in Birmingham, makes auto parts for the motor industry. A division of the company makes two engine components; X and Y. Relevant information on the next budget period for these two components are given below:

 



 

The two components are similar and are usually produced in production runs of 200 units. The production overhead is currently absorbed by using a machine hour rate, and the total of the production overhead for the period has been analysed as follows:



 

Required:

(a) Using the Activity Based Cost information, compare the overhead cost per unit in £ and the percentages of overhead costs for the two parts, X and Y.  (16 Marks)

(b) Using the number of units to assign overhead costs to the parts, X and Y, (a traditional approach) compare the overhead cost per unit in £s and the percentages of overhead costs allocated for the two parts. (12 Marks)

(c) Using the data available, explain the differences between the unit overhead costs in percentages between (a) and (b) above. (12 Marks)

(d) Discuss the advantages and disadvantages of organisational decentralisation.                        (10 marks)

Total marks 50

 

Guidelines

Please read all questions and information provided carefully. Answer should be made in appropriate length keeping in view the requirement of each question and total word counts allowed. In addition, your assignment should demonstrate the following qualities:

A critical appreciation of relevant literature and its use to support argument, substantiate calculations and other aspects of the assignment.

Taking ownership of the content, being prepared to debate and argue a personal position, and providing evidence of evaluative skills. A submission made up of extracts from published sources, which is descriptive or simply just theoretical regurgitation, is not acceptable. Your submission must have interpretation and consideration of the challenges and issues of taking theory into practice.

 

Logical flow of ideas and treatment; appropriate selection of real world factors related to the companies under scrutiny. Evidence of additional personal research, and the ability to analyse material from a variety of appropriate relevant perspectives. 

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