EXECUTIVE SUMMARY
Company History and Background
Tri-Ace Enterprise, a small business enterprise officially joined the computer industry by selling parts, accessories and peripherals back in 2010. This enterprise was established to cater the local industry from the growing industry and seize the opportunity to promote technical products to small offices, banks and local net internet café shops in Central Luzon.
In the early 2011, the company has included different kinds of services such as computer unit repairs and networking solutions to diversify its line of business. The company’s plan to yearly expand its business strengthens to continuously serve in providing technical solutions to clients and reach its target market.
Nature of Business and Major Market Served
Tri-Ace Enterprise was primarily engaged in the sale distribution of computer units, parts, accessories and peripherals. On the succeeding year it has diversified its business line to repair and networking services. Likewise, the company expands its distribution centers outside its comfort zone to cater small and medium offices within its capacity. From its historical values, the company prioritizes its product sales as one of its income generating factor which covers 70% of its total sales. Likewise, the company current priority is to categorically serve the untapped market such as the government sectors, private institutions and residential areas to increase its net revenues and cover its expenses.
Description of Products and Services
The business line of the company is subdivided between product and services. The sale and distribution of primary product consist of brand new and refurbished computers, accessories and peripherals for networking materials. The enterprise expands its repair and networking solution services formally through the integration of training programs to meet the demands of business clients.
In order to expand its business products and services to the next level, the company aims to enhance its marketing promotion and diversify its product in the future through the installation of CCTV products lines to serve the growing demand in business security.
General cost problems and issues
From the data gathered in the interview, the sales acquired from services are just pure estimation using competitor’s pricing standard as benchmark for the organization’s prices. For most cases, the manager sometimes feel that job order are undercharge and requires proper pricing since each job requirement consist of different allocated hours required by the workers to finish the job. The company’s decided to integrate digitalized inventory system to the solve issue. In spite of this advancement, the transition only provides more inconsistency to its inventory and inaccuracy on its pricing structure. The manager has realized that after business integration, the company faces more challenge to align its actual target price for each job service.
General Objective /Purpose of the study
The objective of this case study is to maximize sale benefits by determining the breakeven figure using Cost profit Volume Analysis. The data collected can provide helpful reports and information for internal usage in controlling and planning business activities. Therefore, the objective of the study aims to identify the correct pricing allocation in addressing the issues concerning price inconsistencies on job order services.
To gain more insight on the cost problems encountered by the organization, the study is guided by the following sub-objective:
- To identify the break-even figure of the generated sales
- To determine different values associated for variable and absorption costing.
- To understand and assess the correct allocation for job order services.
CHAPTER 1: INTRODUCTION
Background of the Study
Management accounting has been under discussion and scrutiny for the past decade. In small and medium enterprises, the management accounting is often undertaken by the owner which often resulted to a loss in opportunity costs (CIMA, 2013). Likewise, a lot of Small Medium Enterprise (SME’s) tends use management accounting to control information rather than to use for aiding decision. Applying management accounting in the organization has become important to improve the decision making for managers. However, the implementation to apply new accounting management tools or change process are resisted by the employees from top to lower management level due to traditional operational relations , power and conflict (Pimentel & Major, 2009).