Question

Conduct a quantitative analysis of a company’s internal processes using the Hampshire Company Case Study document. Your analysis will consist of completing the Hampshire Company Spreadsheet and will be accompanied by a memo to management. Specifically, the following critical elements must be addressed: I. Cost-Volume-Profit Analysis Cost-volume-profit (CVP) analysis is a useful tool for informing short-term economic planning within an organization. In this section, a CVP analysis will be conducted and used to inform business decisions and recommendations. A. Perform a CVP analysis based on cost classifications. B. Explain how a CVP analysis can assist management with short-term economic planning. Support your response with examples from your CVP analysis. C. Accurately compute the break-even quantity and break-even revenue. D. Determine whether the company is breaking even. What are the CVP analysis implications on planning? II. Inventory Management Inventory management serves to minimize the cost to maintain inventory and maximize returns. In this section, the company’s financial data will be reviewed in order to determine the optimal inventory management system. A. Determine an optimal cost allocation method based on the relevant costs. B. Describe how this method should be used by decision makers to fulfill their responsibilities. Support your response with examples. C. What are the pros and cons of implementing the just-in-time (JIT) inventory system? Do the pros outweigh the cons for this company? D. Explain how the just-in-time (JIT) inventory system can benefit this organization. Defend your response. E. Identify the inventory management method you recommend, and explain why this method will benefit the company. III. Benchmarking In this section, benchmarking will be reviewed. Benchmarking can be implemented in various ways depending on a company’s circumstances. Your company has decided to implement benchmarking and would like you to research and recommend the most effective approach. A. What is the advantage to benchmarking in terms of improving companies’ performance? Support your response. B. Identify possible approaches to benchmarking. Describe each. C. Which benchmarking method should management adopt and why? IV. Alternative Costing Method There are various costing methods available for companies to implement. As a company grows, it may become beneficial to consider an alternate costing method. A. Identify an alternative costing method that could benefit this company, and describe the main characteristics of that method. B. What should a company look for when trying to determine whether they should adopt such a system? C. Should the company adopt this alternative costing method? Defend your response. V. Memo to Management Your memo to management should serve as a summary of your quantitative analysis, reviewing the key points and recommendations that you feel management should be aware of. A. Describe the overall findings of your analysis, including key elements that management should be aware of. B. Make a recommendation to management based on your cost accounting analysis that will enhance business planning. C. Recommend a performance tool to management based on your cost accounting analysis that will improve business operations.

Answer 1

CVP analysis and benefits

This analysis helps the managers of a business to trigger profits by calculating the break-even point at the time of production and market analysis. This model has complete detailed chart on the basis of various statistics and very helpful model compared to many of the other models which lack some or the other sorts of consistency. It stands for Cost-Volume-Profit analysis indeed which says that with proper regulation in cost and volume of goods to be produced, you will get the optimal profits.

Just-In-Time inventory method and benefits

This is an inventory method where the managers of a business looks down to decrease the costs of holding inventory as far as possible by ordering the goods on time. This reduced the production costs by the way which clearly as explained above. But wherein the goods are not available in bulk or say in necessary quantities, the production process of a department or in whole is to be stopped or shut down rather than to incur profits on the marginal or extra product produced.

Benchmarking method and benefits

This is a method where the mark of output is recognized by the business in order to be aware of extra production losses due to the demand in the market observed and comparing our business to that of the competitor by laying out the benchmark of the production or other other ones. It focuses on the very specific thing or aspect to be adjusted or regulated in order to be optimum profitablility