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Discussion Question:

Sport Aalaa Footwear (SAF) has been manufacturing footwear items for the last 60 years. Huge footwear market has been captured by SAF. Product reliability and competitive pricing policy has led one of its brand – Shoes to the sky. SAF footwear products are warmly welcomed by the customers in the markets due to its attractive designs, colors and comfort etc.

 

Recently, the management of SAF has decided to enter into manufacture and market sports shoes for men athletes running in the Regional Olympics. The new brand has been given the name of “Boots”. Although, there are so many companies in the World crafting shoes for professional athletes running in many Olympics in the world. SAF has a totally new system of crafting this proposed shoe in a unique style.

 

The new manufacturing process is intended to work in three phases – first, the customer (Olympic athlete) goes to SAF Olympic Fitness station, where the SAF employee develops an in- depth customer profiles. In the second phase, the customer goes to Olympic Shoe Design, where scanning of his feet is done through 3-D computer applications along with the personal choices and likings to be felt in the intended shoes.  Also, the customer is given the choice to select any design out of 260 fabricated shoes. In the last phase, all these specs are fed into a highly Automated Boot Manufacturing Machine (ABMM) to develop a prototype. This takes only 2 hours to finish. After this, the customer is invited to try this prototype and a test-run is offered to him on the SAF’s especially developed running track. Various goods or bads are recorded at the time by SAF’s especial teams. Later, upon formal approval from the customer, these findings are again fed into the machine. After 5 days, the ordered shoes are shipped to the customers.


SAF has set up a special division in the company to manage its new product. The division is given a special cost accountant for costing this new product. The accountant is well-aware of the modern costing techniques. He has developed a well-defined costing system and it is expected to work well.




Required:

You are required to identify the costing system using by SAF in the above case.  Support your answer with logical and factual reasons.

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Please Discuss here about this GDB.Thanks

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Different industries follow different methods of costing because of the differences in the nature of their work. The various methods of costing are as follows:

1. Job Costing:

In this case the cost of each job is ascertained separately. It is suitable in all cases where work is undertaken on receiving a customer's order like a printing press, motor workshop, etc. In case a factory produces a certain quantity of a part at a time, say 5,000 rims of bicycle, the cost can be ascertained like that of a job. The name then given is Batch Costing.

2.  Batch Costing:

It is the extension of job costing. A batch may represent a number of small orders passed through the factory in batch. Each batch here is treated as a unit of cost and thus separately costed. Here cost per unit is determined by dividing the cost of the batch by the number of units produced in the batch.

3. Contract Costing

Here the cost of each contract is ascertained separately. It is suitable for firms engaged in the construction of bridges, roads, buildings etc.

4.  Single or Output Costing

Here the cost of a product is ascertained, the product being the only one produced like bricks, coals, etc.

5. Process Costing

Here the cost of completing each stage of work is ascertained, like cost of making pulp and cost of making paper from pulp. In mechanical operations, the cost of each operation may be ascertained separately; the name given is operation costing.

6.  Operating Costing

It is used in the case of concerns rendering services like transport, supply of water, retail trade etc.

7. Multiple Costing

It is a combination of two or more methods of costing outlined above. Suppose a firm manufactures bicycles including its components; the parts will be costed by the system of job or batch costing but the cost of assembling the bicycle will be computed by the Single or output costing method. The whole system of costing is known as multiple costing

Footwear Production - critical aspects

Successful modern manufacturing processes rely on accurate practical information and the ability of staff to understand and apply such information.

In a global and competitive marketplace, knowledge and skills are increasingly important. SATRA has designed this training course for all technologists involved in any aspect of footwear production.

The SAFT (SATRA Accredited Footwear Technologist) award is an internationally recognised qualification, and is clear evidence that you are a footwear technologist with a proven range of knowledge.

Each module is led by a SATRA specialist and covers the subject matter in detail, including comprehensive documentation for the delegate.

By completing the full course you will receive the most comprehensive and up-to-date information in six key areas of footwear manufacture.

Accreditation

Once the course is complete, SATRA will notify you of the next opportunity to take optional written examinations. You must obtain a pass in five of the six modules if you wish to receive a SAFT accreditation. You do not need to take all five examinations at one go, but you must obtain passes in all the papers within two years to obtain accreditation.

Module 4.1 – Pattern cutting, grading and costing

The product design module looks at the design process and what affects the design of footwear. During the course, the delegate will tape up a last, flatten the shell and produce inside, outside and mean formes. From this mean forme, a set of shoe patterns will be produced – including adding allowances.

During this ‘hands-on’ day, the various methods of grading patterns will be explained. Delegates will produce their own examples of graded patterns.

Also covered will be the process of shoe costing, examining the way materials, labour and expenses are calculated to produce a final selling price.

Price (per person)

There is a variable cost per module depending on how many modules the delegate attends.

  • 1 or 2 modules: GBP 890 per module
  • 3 modules: GBP 790 per module
  • 4 modules: GBP 740 per module
  • 5 or 6 modules: GBP 680 per module

Modules 2 and 4 consist of two separate parts where a delegate may attend only one of the days. These single day events are charged at half the full module cost.

 

Anjum Riaz MBA Thanks for shairng 

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yeh GDB lecture #18 to 24 lecture cover karta hai na tou 18 to 24 lectures main sirf two costing system hi hain ...process costing and job order costing

ye job order costing hai

Just concentrate on Chapter # 18 , as it is job order costing system. 

hmm rite

mgt402 gdb solution fall jan 2013


lecture #18 to 24 lecture cover process costing and job order costing


Different industries follow different methods of costing because of the differences in the nature of their work. The various methods of costing are as follows:
1. Job Costing:
In this case the cost of each job is ascertained separately. It is suitable in all cases where work is undertaken on receiving a customer's order like a printing press, motor workshop, etc. In case a factory produces a certain quantity of a part at a time, say 5,000 rims of bicycle, the cost can be ascertained like that of a job. The name then given is Batch Costing.
2. Batch Costing:
It is the extension of job costing. A batch may represent a number of small orders passed through the factory in batch. Each batch here is treated as a unit of cost and thus separately costed. Here cost per unit is determined by dividing the cost of the batch by the number of units produced in the batch.
3. Contract Costing
Here the cost of each contract is ascertained separately. It is suitable for firms engaged in the construction of bridges, roads, buildings etc.
4. Single or Output Costing
Here the cost of a product is ascertained, the product being the only one produced like bricks, coals, etc.
5. Process Costing
Here the cost of completing each stage of work is ascertained, like cost of making pulp and cost of making paper from pulp. In mechanical operations, the cost of each operation may be ascertained separately; the name given is operation costing.
6. Operating Costing
It is used in the case of concerns rendering services like transport, supply of water, retail trade etc.
7. Multiple Costing
It is a combination of two or more methods of costing outlined above. Suppose a firm manufactures bicycles including its components; the parts will be costed by the system of job or batch costing but the cost of assembling the bicycle will be computed by the Single or output costing method. The whole system of costing is known as multiple costing
Footwear Production - critical aspects
Successful modern manufacturing processes rely on accurate practical information and the ability of staff to understand and apply such information.
In a global and competitive marketplace, knowledge and skills are increasingly important. SATRA has designed this training course for all technologists involved in any aspect of footwear production.
The SAFT (SATRA Accredited Footwear Technologist) award is an internationally recognised qualification, and is clear evidence that you are a footwear technologist with a proven range of knowledge.
Each module is led by a SATRA specialist and covers the subject matter in detail, including comprehensive documentation for the delegate.
By completing the full course you will receive the most comprehensive and up-to-date information in six key areas of footwear manufacture.
Accreditation
Once the course is complete, SATRA will notify you of the next opportunity to take optional written examinations. You must obtain a pass in five of the six modules if you wish to receive a SAFT accreditation. You do not need to take all five examinations at one go, but you must obtain passes in all the papers within two years to obtain accreditation.
Module 4.1 – Pattern cutting, grading and costing
The product design module looks at the design process and what affects the design of footwear. During the course, the delegate will tape up a last, flatten the shell and produce inside, outside and mean formes. From this mean forme, a set of shoe patterns will be produced – including adding allowances.
During this ‘hands-on’ day, the various methods of grading patterns will be explained. Delegates will produce their own examples of graded patterns.
Also covered will be the process of shoe costing, examining the way materials, labour and expenses are calculated to produce a final selling price.

Price (per person)
There is a variable cost per module depending on how many modules the delegate attends.
• 1 or 2 modules: GBP 890 per module
• 3 modules: GBP 790 per module
• 4 modules: GBP 740 per module
• 5 or 6 modules: GBP 680 per module
Modules 2 and 4 consist of two separate parts where a delegate may attend only one of the days. These single day events are charged at half the full module cost.

yeah upar phaly b share hua va ha tariq bhai

Dear Colleagues, as i have already suggested that it is a job order costing system which SAF should be applying. I based my opinion on the following:

  • Specific to one individual athlete.
  • All process / steps involved in the production of this shoe, is purely according to the desire, specifications, size and requirements of a specific athlete.
  • Time consumed / spent on this specific job will be counted for this only.
  • Feedback and customer satisfaction is also obtained to fulfill the exact requirements of this specific athlete. 
  • Employment of extra department with special experts in the costing fields is also giving an indication that this process will be more costly. So u can well distinguish that which costing system is more costly and require more clerical staff.

So my friends, do not think much. Sit a side, develop your thoughts, arrange them logically and LIKH DALO. Allah khair karay ga. Best of Luck.   

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