ENGINEERING MANAGEMENT

Engineering management



Engineering Management

Part One

Introduction

Most systems which are in existence now are set up with less concern regarding economic issues. Most of the time, system costs are calculated by taking into consideration the disjoint segments of different stages of the life cycle of the system. Industry has been experiencing unexpected fluctuations in the costs of operating and maintaining their systems. This leads to less cost-effective systems being developed as a result of the combination of inflation and cost growth and issues like neglecting support costs, treating fixed costs as variable costs and vice versa, lack of realistic assessment of total cost, etc. The manufacturing industry is one of the industries where accurate cost estimation is crucial during the budgeting and designing phases of the project, product pricing, quoting price to customers, etc. Research for new product development will always be a main driving factor for the manufacturing industry but, product innovations are only possible with new manufacturing process innovations. The progress in innovating new assembly processes or strategies or improving existing assembly processes will play a major role in a manufacturing industry's progress. Therefore, the assembly process is still playing a key role in the entire manufacturing process.

Solution to the problem

(a) The mistake which he was making in this topic was that he cannot simply assume that $550 will be the profit of his business. This is considered a classic mistake in a costing business.

(b)

Income

 

 

50 sticks @ £20

 

1000

 

 

 

Costs

 

 

Wood

50

 

Brass

75

 

100 Glass flasks (bought in)

25

 

Part-time labour

50

 

2 full-time workers @ £100 per week

100

 

Overheads and general marketing

100

 

Total Costs

 

450

Profit (Income less Total Costs)

 

550

(c) True Fixed costs of the business transactions will comprise of the loan interest and repayment along with depreciation expense. The amount will total= $200+$150= $350.

The variable costs will comprise of all the material and labour costs that will include= $50+$75+$25+$50+$100+$100= $450.

(d) Graph of the absorption costing

Second Part

Overview of management accounting

Indeed, the management accounting techniques of activity-based costing ,and, value chain analysis have addressed the costs for a particular firm; however, previous research has not described the process by which the supply chain lead-firm obtains and utilizes inter-enterprise cost information. Achieving the efficiencies or effectiveness improvements that SCM seeks requires a management accounting system that captures important cost data outside of the firm. The researchers in 1999 suggested that there are three fundamental roles for management accounting in inter-firm relationships: 1) the make-or-buy decision that could lead to a partnership, 2) the use of a management accounting technique to manage the partnership, and, 3) the platform for assessing each supply chain partners' responsibilities and their performance. Management accounting seeks to provide timely and accurate information to the managers responsible for making short and long-term decisions that affect planning, coordination, control, performance measurement, and motivation (Banker, 1995, 137).

Management accounting systems provide information that traditional cost accounting was not designed to collect. Traditional cost accounting was designed to capture the operational costs that become the basis for financial statements used by the firm's shareholders and/or auditors of the ...