05 Jul Al Ain UniversityCollege of BusinessAbu Dhabi Camp
Al Ain UniversityCollege of BusinessAbu Dhabi CampusMBA ProgramCase Study 2Second Semester 2019-2020Due date on 25/04/2020Course Title Manageriiall AccounttiingCourse Code 0502603Instructor’s Name Dr.. Mahmoud NassarStudent NameSttudeentt I..DSeeccttiion # 611AL AIN MANUFACTURING COMPANY AACFor 6 years, Al Ain Company (AAC) only produced one product: the basic electric kettle for boiling water. The kettle was the first on the market to have a reliability system enabling it to turn itself off at the exact moment when the water had boiled. It is also light enough to be carried easily, looked modern and was quite robust.From a manufacturing point of view, the kettle consisted of:*pressed stainless steel body and lid, which AAC bought complete*heat-insulated handle of wire and plastic, which also formed the cover of the switching mechanism above the hole for electric plug, which AAC bought complete*heating element, which AAC bought semi-finished*thermostat and switching mechanism, which AAC pre-assembled from standard electrical componentsThe thermostat and switching mechanism were both technically, and in market terms, the heart of the product and were protected by a large number of patents. This was the main reason why AAC preferred to manufacturing this part completely whereas it bought all other parts in more or less finished form. Final assembly, test (mainly electrical insulation efficiency) and packaging was also carried out by AAC.Immediately after it was founded, AAC greatly prospered. The automatic kettle was not only useful in a coffee/tea-drinking country where households needed a convenient supply of boiling water in several different rooms of the house. It also seemed to appeal to the safety needs of housewives who might otherwise have been afraid of an unattended kettle boiling dry, melting and setting fire to the house.The AAC kettle however confirmed its safety to the housewives every time it switched off in normal operation when the water is boiled. It also profited from the fact that the basic idea behind the thermostat was so beautiful simple, that no effective challenge was ever mounted to its main patents.Last year AAC manufactured and sold 143,000 kettles for 39 Dh each, but each kettle only costs 20.57 Dh. Look at the figures! The finished components for each kettle cost just over 10.50 Dh, AAC had to spend 100,000 Dh on standard electrical parts for the thermostats, wages costs were 1,128,000 Dh (including health insurance), the plant rent was 100,000 Dh, heat and lighting in that draughty place were 17,000 Dh and all other general expenses were another 95,000 Dh.At the end of the year AAC had no inventory left in the warehouse; neither finished products nor parts, nor raw materials. The president of AAC (who also the managing director and a partner) looked at those numbers and said let us party! We have made a profit of 18.43 Dh per kettle.The financial officer (who is the other partner) said: don’t forget all those people in administration and sales. They cost 451,000 Dh. (including advertising). What about those machines and equipment you had to buy. We have used the machines and equipment,2which cost one million Dh, so much that we would not even get scrap value from them. They are worn out and worth nothing.Questions:On the basis of the above information:1-How much did each kettle cost to manufacture and what was the gross margin per kettle?2-What was the total cost of each kettle, the average net profit per kettle, and net profit for the whole company for the year3-Can we, in real life, use this sort of product cost calculation in most normal manufacturing companies? If not, why?
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.