Question

In: Accounting

a) HKL is a manufacturer and distributor of printed stationery products that are sold in a...

a) HKL is a manufacturer and distributor of printed stationery products that are sold in a wide variety of retail stores around the country. There are two divisions: Manufacturing and Distribution. A very large inventory is held in the distribution warehouse to cope with orders from retailers who expect delivery within 24 hours of placing an order.

HKL’s management accountant for the Manufacturing division charges the Distribution division for all goods transferred at the standard cost of manufacture which is agreed by each division during the annual budget cycle. The Manufacturing division makes a 10% profit on the cost of production but absorbs all production variances. The goods transferred to Distribution are therefore at a known cost and physically checked by both the Manufacturing and the Distribution division staff at the time of transfer.

The customer order process for HKL’s Distribution division is as follows:

i) HKL’s customer service center receives orders by telephone, post, fax, email and through an online Internet ordering facility. The customer service center checks the creditworthiness of customers and bundles up orders several times each day to go to the Distribution division.

ii) All orders received by the Distribution division are input to HKL’s computer system which checks stock availability and staff would then produce an invoice for the goods using another accounting system.

iii) Internet orders have been credit checked automatically and stock has been reserved as part of the order entry process carried out by the customer. Internet orders automatically result in an invoice being printed without additional input.

iv) The Distribution division uses a copy of the invoice to select goods from the warehouse, which are then assembled in the loading dock for delivery using HKL’s own fleet of delivery vehicles.

v) When HKL’s drivers deliver the goods to the customer, the customer signs for the receipt and the signed copy of the invoice is returned to the Distribution division and then to the account department.

vi) HKL’s management accountant for the Distribution division produces monthly management reports based on the selling price of the goods less the standard cost of manufacture. The control for inventory is compared with the monthly inventory valuation report and while there are differences, these are mainly the result of write-offs of damaged or obsolete stock, which are recorded on journal entry forms by the Distribution division and sent to the account department.

Due to the size of inventory held, a physical stocktake is only taken once per annum by Distribution staff, at the end of the financial year. Besides, there is limited use of computerized system to keep track the movement of stocks; they rely on human power to check the stocks for delivery. As for this, this has always revealed some stock losses, although these have been at an acceptable level. Both internal and external auditors are present during the stocktake and check selected items of stock with the Distribution division staff. Due to the range of products held in the warehouse, the auditors rely on the Distribution division staff to identify the products held.

Identify and analyse the key weaknesses in the risk management approach that the directors of HKL should look into. Also, suggest the course of action that should be taken. Relevant examples or illustrations should be given.

Solutions

Expert Solution

Answer :

HKL should be aware of threat profiles and vulnerabilities and to respond effectively, should an attack happen • Identify potential internal and external threats like customer information scrapping, business logic abuse, malicious attack footprint, etc. through our cyber forensic approach, which blends network forensics, security perimeter forensic analysis, activity forensic and data integrity forensic. Analyse malware presence through a root-cause-oriented approach using our malware exploration framework

HKL Lacks Conduct market studies to identify potential scenarios of dominance by looking at aspects such as

: – Relevant market and defining the product (online and offline retail) and geographic markets using economic theory for the entity under examination.

:- Cost structure and the pricing of the product

– Quantifying whether the player was a dominant player in the “relevant market” by using concentration ratios and indexes

– Use of sophisticated economic analysis tools like the recoupment test

There is limited use of computerized system to keep track the movement of stocks; they rely on human power to check the stocks for delivery, HKL should Introduce Computerzied environment to the organisation so to keep track on movement of STOCKS and check other requirmnets.

Let us consider an example:-

  Lets say Amazon

These are your typical online retailers. They can include apparel stores, homeware businesses, and gift shops, just to name a few. Stores that sell physical goods showcase the items online and enable shoppers to add the things they like in their virtual shopping carts. Once the transaction is complete, the store typically ships the orders to the shopper, though a growing number of retailers are implementing initiatives such as in-store pickup.

there is much less intervention of human as major data is stored and retrived through internet so requires much use of computerized environment to enable organisation with proper recording of transaction and true and correct reflection of stocks in movements , account receivables and revenue generated by such organisation.


Related Solutions

Stationery Hut is engaged in the purchase and sale of stationery products. The inventory of the...
Stationery Hut is engaged in the purchase and sale of stationery products. The inventory of the company ranges from carbon pencil to cartridge. It has earned the reputation of delivering high quality products in a timely manner. The following transactions are relating to Stationery Hut for the month of April 2020. Date Transaction April 1 Purchased merchandise from White Company for OMR 5,000 under credit terms of 1/15, n/30, FOB Shipping Point. 2 Sold merchandise to Terry Company for OMR...
Astor Industrial Supply is a manufacturer and distributor of standard and custom gaskets, seals, converted products,...
Astor Industrial Supply is a manufacturer and distributor of standard and custom gaskets, seals, converted products, and machined parts. It provides sealing and other industrial solutions to markets ranging from defense, aerospace, power generation, mining, wastewater treatment, electronics, pharmaceutical, and food and beverage. On January 2, 2016, Travis Allen, the executive vice president and CFO of Astor Company, was preparing for the January meeting of the Capital Budget Committee (CBC).The CBC is considering 7 projects representing over $30,000,000 in capital...
You are a marketing manager for a manufacturer of nonperishable products sold in grocery stores. In...
You are a marketing manager for a manufacturer of nonperishable products sold in grocery stores. In this role, you need to make various decisions about how much marketing/advertising support is needed by each product to maximize the profitability of the organization. Assess how the effectiveness of individual marketing/advertising approaches would be determined. Discuss how historical sales data, as well as promotional response data, can aid you in evaluating the effectiveness of the individual marketing/advertising approaches. Support your discussion with relevant...
A manufacturer sells two types of products. Product 1 is sold at a price of $50...
A manufacturer sells two types of products. Product 1 is sold at a price of $50 per unit and product 2 at a price of $60 per unit. Three units of raw material and 1.5 labor hours are needed to manufacture one unit of product 1. Six units of raw material and 2 labor hours are needed to manufacture one unit of product 2. The unit variable cost for product 1 is $30, and for product 2 is $20. A...
A manufacturer sells two types of products. Product 1 is sold at a price of $50...
A manufacturer sells two types of products. Product 1 is sold at a price of $50 per unit and product 2 at a price of $60 per unit. Three units of raw material and 1.5 labor hours are needed to manufacturer one unit of product 1. Six units of raw material and 2 labor hours are need to manufacture one unit of product 2. The unit variable cost for product 1 is $30, and for product 2 is $20. A...
A semiconductor manufacturer produces printed circuit boards that are sampled to determine the thickness of their...
A semiconductor manufacturer produces printed circuit boards that are sampled to determine the thickness of their copper plating. The following statements create a data set named Trans, which contains the plating thicknesses (Thick) of 50 boards: 3.412 3.45 3.551 3.451 3.60 3.462 3.586 3.645 3.252 3.62 3.606 3.634 3.852 3.56 3.342 3.341 3.444 3.774 3.632 3.199 3.71 3.654 3.723 3.981 3.934 3.708 3.934 3.315 3.762 3.223 3.469 3.481 3.515 3.535 3.46 3.575 3.488 3.515 3.484 3.482 3.517 3.483 3.467 3.467...
Because of the increase in demand of your 3D printed products that will assist in the...
Because of the increase in demand of your 3D printed products that will assist in the COVID-19 pandemic, you need to hire additional personnel. Due to social distancing, what training and development methods would you utilize and why (e.g., an orientation, on the job training, off the job training, an apprenticeship program, online training, vestibule training, or job simulation)?
The office manager for the Metro Life Insurance Company ordersletterhead stationery from an office products...
The office manager for the Metro Life Insurance Company orders letterhead stationery from an office products firm in boxes of 500 sheets. The company uses 6500 boxes per year. Annual carrying costs are $3 per box, and ordering costs are $28. The following discount price schedule is provided by the office supply company: ORDER QUANTITY (BOXES) PRICE PER BOX  200–999  $16 1000–2999  14 3000–5999  13 6000+      12 Determine the optimal order quantity and the total annual inventory cost. 13.32 Determine...
A printed circuit board manufacturer will construct a new plant. The potential sites have the following...
A printed circuit board manufacturer will construct a new plant. The potential sites have the following estimates of income and cost. A plant on Site A would cost $30.2 million (mil) to build, produce $31.6 mil/year in revenues, $22.7 mil/year in expenses, and last 18 years. At Site B construction will cost $34.5 mil with $35.2 mil of revenues per year, $25.2 mil/year in expenses and will also last 18 years. Use the internal rate of return to determine which...
Case - PCB Electronics PCB Electronics is a contract manufacturer of printed circuit board assemblies that...
Case - PCB Electronics PCB Electronics is a contract manufacturer of printed circuit board assemblies that specializes in manufacturing and test engineering support of complex printed circuit boards for companies in the defense and medical instruments industries. The assembly process begins with raw printed circuit boards, into which preprogrammed robotic machines insert various integrated circuits and other components, and then these parts are soldered onto the board. The board is then tested before shipment to the customer. Four separate assembly...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT