Pci, Case Study, Mia Case Study

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  • Topic: Generally Accepted Accounting Principles, Profit, Material
  • Pages : 5 (806 words )
  • Download(s) : 651
  • Published : March 25, 2013
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INTRODUCTION
The issue started on February 2008 when the new appointed Managing Director of PCI Sdn Bhd, En Ghani reviewed 2007 Financial Report and found out there were recent increases in costs of goods sold and inventories. The rate of increase in costs of goods sold had been disproportionate with growth of sales. En Ghani was informed that one of the reasons for the increase in cost was because of the current purchasing system that contributes to redundant purchasing and high inventory holding costs. Siti Aminah, the Chief of Financial Officer was asked to review the current purchasing system and suggested the need to implement a new computerized purchasing system that would help relieve some of its manual operations and at the same time would ensure it has the proper controls in place. En Ghani requested a formal report on current purchasing system and suggestion for a new system before the next management meeting which would be in two weeks time. En Ghani assigned Siti Aminah on the special task instead of the senior Chief Production Officer and she did not have any experience in system and technology. The new system must be able to reduce costs, enhance control and provide easy management of users and services in qualitative and quantitative ways.

CHARACTERS
En Ghani : as the new appointed Managing Director of Penda Cable Industry Berhad, who reviewed past year Financial Report and asked for formal report from Siti Aminah. Siti Aminah : the Chief of Financial Officer that being asked to make formal report instead of the Senior Chief of Financial Officer.

CURRENT PURCHASING SYSTEM IN PCI
Purpose : to ensure the purchase of raw material (exclude external Aluminium cable scap) that was required for the manufacturing of cable, conductors and associated products. 1)

Monthly Raw Material Summary
Cik Lim
General Manager of Material Resources and Planning
En Razi
Assistant Purchasing Manager
(MRMS)

Review

1st week of Forecasted Monthly
Every month Material Requirement
En Sam
General Manager Purchasing
(MMR)MRMS
Planning Section

En Razi

2)
Cik Anne Purchasing Clerk
>RM100 000 En Ghani
Filing

En Min
Raw Material Storekeeper
<RM 100 000 Cik Lim
PURCHASE ORDER

COCORDER CONFIRMATION

CompetitiveNot
En Sam
En Razi
Vendors
Competitive
Quotation Quotation
3 ) Suppliers
Invoices
Cik Lim
Cik Anne
Coded, Batched and Checked Invoices

Delivery Store Received a) Verification Order Notes b) Account Payable Reference No.
En Min c) Update Account Payable list in Assistant Finance Manager
the computer.

4) Enclosed with the return receipt of cheque / TT for notification of payment

DO,COC
Vendors
MaterialRAW MATERIAL STORE
RMRR VCAR
Financial Department (for payment)
InvoicePURCHASING SECTIONShipping
Document
Shipping PCI BANK
Document
VOUCHER
Voucher
Approved
Delivery Order
RMS 2 Form
Purchasing Clerk
En Min
Assistant Finance Manager
& Signed

QUANTITATIVE DECISION
| 2006| 2007|
GROSS PROFIT MARGIN(Gross Profit/Revenue)| (12086851/176877312) = 0.07| (48053370/298146915)
=0.16|
OPERATING PROFIT MARGIN(Operating Profit/Revenue)| (6386819)/176877312 =(0.03)| 35657392/298146915
=0.12|
INVENTORY TURNOVER(COGS/Inventories)| (164,790,461)/27434751=(6)
| (250,093,545)/45,575,893=(5.48)|
AVERAGE COLLECTION PERIOD(Debtors/(Revenue/360))| 15,506,128/(176,877,312/360) =31.6 days| 8,453,275/(298,146,915/360)
=10 days|

Gross Profit Margin
When the company shows the higher...
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