Standard Soap Company Cost Accounting
1.0 Introduction
Standard Soap Corp. (SSC) is a $ 30-35 million company producing 5,000 different varieties of bar soap. SSC has four broad production processes– transformation of raw materials, drying of bulk soap, production of soap batches and packaging. However, there are underlying complexities involving up to 5000 different paths during these production processes. This poses a potential challenge for the management to efficiently handle the underlying information base.
In addition, SSC has faced major changes in its customer base and their product expectations. There is a greater emphasis on inspections and quality control, reinforcing the need for an elaborate information management system. It appears that the full potential of SSC profitability is not being realised due to reliance on an outdated information and cost accounting model.
The objective of this report is to elucidate the method of integrating SSC operational processes, information and cost accounting aspects through ABC, thus aligning them with their competitive strategy. We will identify potential issues and recommend viable solutions.
2.0 Conclusion
SSC has reached a position of business eminence through a process of adaptation and evolution. The transformation of the company’s focus from being a broad product player into the niche sector has been well founded. The use of a pilot information project in the eighties and the ACMS in the nineties, though beneficial, is now in an urgent need for refinement. The contemporary business environment calls for more reliable management information tools to serve SSC’s planning and decision support systems. By addressing these pressing challenges, SSC can leverage its position for growth and competitive edge.
Adoption of the ABC system can generate quality information and link improved operational efficiency with efficient strategic planning. It can assist
Standard Soap Corp. (SSC) is a $ 30-35 million company producing 5,000 different varieties of bar soap. SSC has four broad production processes– transformation of raw materials, drying of bulk soap, production of soap batches and packaging. However, there are underlying complexities involving up to 5000 different paths during these production processes. This poses a potential challenge for the management to efficiently handle the underlying information base.
In addition, SSC has faced major changes in its customer base and their product expectations. There is a greater emphasis on inspections and quality control, reinforcing the need for an elaborate information management system. It appears that the full potential of SSC profitability is not being realised due to reliance on an outdated information and cost accounting model.
The objective of this report is to elucidate the method of integrating SSC operational processes, information and cost accounting aspects through ABC, thus aligning them with their competitive strategy. We will identify potential issues and recommend viable solutions.
2.0 Conclusion
SSC has reached a position of business eminence through a process of adaptation and evolution. The transformation of the company’s focus from being a broad product player into the niche sector has been well founded. The use of a pilot information project in the eighties and the ACMS in the nineties, though beneficial, is now in an urgent need for refinement. The contemporary business environment calls for more reliable management information tools to serve SSC’s planning and decision support systems. By addressing these pressing challenges, SSC can leverage its position for growth and competitive edge.
Adoption of the ABC system can generate quality information and link improved operational efficiency with efficient strategic planning. It can assist