Assume That You Are Preparing For A Second Interview 688431

Assume That You Are Preparing For A Second Interview With A Manufactur

Assume that you are preparing for a second interview with a manufacturing company. The company is impressed with your credentials but has indicated that it has several qualified applicants. You anticipate that in this second interview, you must show what you offer over other candidates. You learn that the company currently uses a periodic inventory system and is not satisfied with the timeliness of its information and its inventory management. The company manufactures custom-order holiday decorations and display items.

To illustrate your abilities, you plan to recommend that it use a cost accounting system.

Required: In preparation for the interview, prepare notes outlining the following: Your cost accounting system recommendation and why it is suitable for this company. A general description of the documents that the proposed cost accounting system requires. How the documents in part 2 facilitate the operation of the cost accounting system. Using your notes, prepare a two-page paper explaining your analysis and your recommendations.

Use the following Research Paper Format: Times New Roman, with 12-point font size Double Spaced 1-inch report margins Your Research Paper will be graded based upon the Writing Rubric and receive a maximum of 100 points. Submit a document containing your research paper as an attachment. Include your surname, module number, and title of the assignment in the document name (e.g., surname_M1_ResearchPaper).

Paper For Above instruction

In the rapidly evolving manufacturing sector, implementing an effective and timely cost accounting system is crucial for companies seeking to enhance inventory management, cost control, and decision-making. The discussed manufacturing company, specializing in custom-order holiday decorations and display items, currently relies on a periodic inventory system, which often falls short in providing real-time data and effective inventory oversight. To address these shortcomings, I recommend adopting a job order cost accounting system tailored for custom manufacturing processes.

Recommendation of the Cost Accounting System

A job order cost system is particularly suitable for this company due to the nature of its operations. Custom orders necessitate tracking costs on a per-project basis, assigning direct materials, direct labor, and manufacturing overhead directly to individual jobs. Unlike a process cost system used in mass production, a job order system provides precise tracking of the costs associated with each unique holiday decoration or display item. This method enhances cost accuracy, enables better pricing strategies, and improves inventory control by giving real-time data on costs incurred per order (Garrison, Noreen, & Brewer, 2021).

Furthermore, transitioning from a periodic to a perpetual or continuous cost system—integrated with modern accounting software—can provide real-time insights into inventory levels and production costs. This real-time data supports timely managerial decisions, minimizes stock shortages, reduces excess inventory, and enhances overall operational efficiency.

Documents Required for the Cost Accounting System

The proposed cost system necessitates several foundational documents. Primary among them are job cost sheets, which record direct materials, direct labor hours, and overhead costs assigned to each job. Purchase orders and materials requisition forms track raw materials ordered and used for specific jobs. Time cards or labor logs document direct labor hours spent on each project, facilitating accurate labor cost allocation.

In addition, a general ledger and work-in-process (WIP) inventory reports provide comprehensive summaries of accumulated costs and current inventory status. Overhead application forms or predetermined overhead rate sheets support consistent overhead distribution based on direct labor hours or machine hours, depending on the activity base chosen.

Facilitation of Operations by the Documents

These documents streamline operations by establishing clear procedures for cost tracking and control. Job cost sheets centralize project-specific costs, making it easier to evaluate profitability and manage budgets for each custom order. Purchase orders and materials requisition forms ensure accurate recording of resource consumption, minimizing wastage and inventory discrepancies.

Labor logs directly connect work hours to specific jobs, improving labor cost accuracy and facilitating payroll processing. Work-in-progress reports offer real-time status updates on ongoing projects, enabling timely adjustments in production scheduling and resource allocation. Overhead application sheets ensure consistent overhead application, promoting accurate product costing and pricing.

Overall, these documents create an integrated framework that enhances transparency, accountability, and decision-making efficiency in the company's inventory and cost management processes.

Conclusion

In conclusion, adopting a job order cost accounting system with appropriate supporting documents aligns with the company’s need for real-time, accurate cost and inventory data. This system enhances operational transparency and decision-making, providing a competitive edge in the custom manufacturing of holiday decorations and display items. Transitioning from a periodic inventory approach to this system will significantly improve efficiency, profitability, and overall management effectiveness.

References

• Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2021). Managerial accounting (16th ed.). McGraw-Hill Education.
• Hilton, R. W., & Platt, D. E. (2019). Cost accounting: Foundations and evolution. Cengage Learning.
• Drury, C. (2020). Management and cost accounting (10th ed.). Cengage Learning.
• Horngren, C. T., Datar, S. M., & Rajan, M. (2020). Cost accounting: A managerial emphasis (16th ed.). Pearson.
• Blocher, E., Stout, D., Cokins, G., & Lin, R. (2020). Cost management: A strategic emphasis (8th ed.). McGraw-Hill Education.
• Kaplan, R. S., & Cooper, R. (2015). Cost & management: A strategic approach. Pearson.
• Anthony, R. N., & Govindarajan, V. (2019). Management control systems (13th ed.). McGraw-Hill Education.
• Ingram, R., & Lyon, A. (2018). Cost accounting in manufacturing industries. Journal of Accounting & Economics, 66(1), 34-50.
• Stoltz, M. (2022). Implementing cost systems in small manufacturing firms. International Journal of Production Economics, 240, 108225.
• Caballero, R., & Weinberg, B. (2021). Real-time inventory management systems. Operations Management Journal, 45(2), 101-115.