Accounting For Business Decision Making Profile Company Study by solehin251

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Accounting For Business Decision Making
Profile Company Study

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Accounting For Business Decision Making
Company Study
(Cam Highland Tomato Sdn Bhd)


1.0 COMPANY INFORMATION Cam Highland Tomato Sdn Bhd is a farm fresh tomato suppliers/distributor and wholesaler with the exporting capacity of 50 tones or more of tomato each week. The company established in 1995 in Cameron Highland Pahang. With the total investment of RM1.2 million, Cam Highland Tomato Sdn Bhd is the specialist of all kinds of fresh tomato and other preserve vegetables.

"QUALITY FIRST" is always been the company principle of producing the product. The agricultural site and packaging factory are with the advanced quality guaranteed system, and the company had comprehensively introduced Total Quality Management in approach, implementing procedure and technical aspect throughout the management and employees.

The raw tomatoes are harvested our agricultural site in Kampung Raja Cameron Highlands. The lycopene content in the tomato produced in this district is above 60% in average because of long time sunlight time. Therefore, Cam Highland's tomato is known for its higher lycopene, stable in concentration and viscosity, uniform and tender in tissues and best taste.

By adopting a high quality control on the agriculture and manufactory procession and provide first-class service to customers with strong technical assistance, the company manages to tap into foreign market. Exports markets consist of North and South America, Europe, Oceania, Africa, Middle East and Asia Pacific.


1.1 Corporate Information a) Company Name: b) Business Type: c) Product/Services: d) Legal Representative (CEO): e) Contact Person: f) Address: Cam Highlands Tomato Sdn Bhd Agriculture/Distributor/Wholesaler Tomato Mr. Anbalagan Doriraj Mr. .Santhiaran Doriraj 19, Tingkat 1, Taman Matahari Cerah, Kampung Raja, Cameron Highlands, Pahang, Malaysia g) Telephone: h) Fax: i) j) Website: Number of Employees: 6012- 5112736 605 498324

11 - 50 People North America South America Western Europe Eastern Europe Southeast Asia Middle East Africa Oceania

k) Main Markets:


2.0 COMPANY ORGANIZATION Cam Highland Tomato Sdn Bhd

Board of Directors

Managing Director

Finance and Administration Department

Sales and Marketing Department

Human Resource Department

Inventory/Storage Department

Production (crops) Department

Production (packaging) Department


3.0 PRODUCTION COST Crop type: Location: Crop area: Duration: Harvest Date: Pole Tomatoes Kampong Raja Cameron Highland 7 acres Six months Disember 2007

3.1 MAIN PRODUCT COSTS Main product cost for Cam Highland Tomato Sdn Bhd pole tomato crops production consists of four (4) main costs as mentions below:

① Cultural /Land Preparation Costs ② Growing Cost ③ Overhead Cost ④ Pre-harvest Costs ⑤ Harvest, Pack, And Sell Costs ⑥ All Cost (Production)


3.2 DETAIL PRODUCT COST (a) Cultural Operation a) Land Preparation (Total growing costs do not include these items.) b) Subsoil (mechanical operations at customs rates) c) Fumigate (field/bed) d) Mulch beds (black plastic, 48" x 1.5 mil) e) Install new drip system (filters, etc.) f) Disc Cost Involved Not Required RM300.00 RM350.00 RM350.00 RM650.00 4x RM20.00 RM80.00 RM168.00 RM40.00 RM30.00

g) Mark beds/lay tape/fertilize h) Drip tape i) j) Herbicide + Applic. (Custom rate of application included in cost) Fertilizer (banded pre-plant 11-48-0)


RM2, 048.00


(b) GROWING PERIOD a) Seed b) Transplanting (0.075/plant x 6,000 + 45 hrs. labor) c) Irrigation (3 acre feet of water @ RM400/acre ft.) d) Prune 2x (35 hrs. labor) e) Stake (20 hrs. labor) f) String 6x (55 hrs. labor) Cost Involved RM100.00 RM709.00 RM1,200.00 RM201.00 RM115.00 RM316.00 RM150.00 2x RM14.00 RM69.00 RM156.00 RM500.00 RM70.00 RM250.00 RM201.00 2x RM14.00 RM4, 093.00

g) Twine h) Cultivate i) j) Hand Weed 2x (12 hrs. labor) Fertilizer (300 units of 12-12-12 @ RM0.52/unit)

k) Pest and Disease Control (20 x RM25/acre drag line) l) Pest Control Advisor (RM10/acre/mo. x 7 mo.)

m) Insecticides and Fungicides n) Pull Stakes (35 hrs. labor) o) Disc and Roll Refuse 2) TOTAL GROWING COSTS

(c) OVERHEAD a) Land Rent (RM300/acre/mo. x 7 mo.) b) Cash Overhead (12% of pre-harvest cost and rent) 3) TOTAL OVERHEAD

Cost Involved RM2100.00 RM537.00 RM2, 637.00

4) TOTAL PRE-HARVEST COSTS (Total Growing Cost + Overhead)

RM6, 730.00


(d) HARVEST, PACK, AND SELL a) Pick and Haul to Shed (RM1.30/box x 3,000) b) Pack (RM2.00/box x 3,000) c) Sell (8% x 3,000 x RM6.00 avg. sale price) 5) TOTAL HARVEST, PACK AND SELL Cost Involved RM3,900.00 RM6,000.00 RM1,440.00 RM5, 940.00


RM2, 048.00 RM6, 730.00 RM5, 940.00 RM14, 718.00


4.0 THE ROLES OF MANAGEMENT 4.1 Application The practical role of managerial accounting is to increase knowledge within an organization and therefore reduce the risk associated with making decisions. Accountants prepare reports on the cost of producing goods, expenditures related to employee training programs, and the cost of marketing programs, among other activities. These reports are used by managers to measure the difference, or "variance," between what they planned and what they actually accomplished, or to compare performance to other benchmarks. ACCOUNTING

For example, a Cam Highland Tomato Sdn Bhd packaging assembly line supervisor might be interested in finding out how efficient his/her line is in comparison to those of fellow supervisors, or compared to productivity in a previous time period. An accounting report showing inventory waste, average hourly labor costs, and overall per-unit costs, among other statistics, might help the supervisor and superiors to identify and correct inefficiencies. A detailed report might evaluate the assembly line data and estimate trends and the long-term effects of those trends on the overall profitability of the organization.

As another example, a crop production manager at Cam Highland Tomato Sdn Bhd would probably want to know how much overhead each of the products is consuming. A report that breaks down the amount of overhead attributable to each product might help the manager better determine the profitability of each item in the line of goods and to find out if the sales and profit goals for each item are being met. For instance, a certain type of tomato crops may be selling very well and generating large amounts of cash flow. However, a close accounting of that product's actual costs within the organization may reveal that its contribution to overall profits significantly lags that of other offerings in the different type of tomato crop production.

Armed with that information, the product manager might elect to adjust marketing


expenditures to emphasize more profitable items, or to concentrate on reducing expenses related to the shampoo.

Because of the need for detailed information about specific operations within a company, management accounting reports are typically much more in-depth than traditional financial accounting reports, such as balance sheet ratios and net income calculations. Most managerial reports also differ from financial reports in their frequency. Many internal reports, in fact, are generated monthly, weekly, or even daily in the case of information such as cash receipts and disbursements. Despite their emphasis on detail, a critical characteristic of most managerial accounting reports is that they are presented in summary format. Managers can read the summaries, efficiently identify possible problem areas, and then examine the details within those areas to determine a course of action.


4.2 Planning and Controlling In the examples described previously, just as in most managerial accounting applications, information produced for managers is used to make decisions about the future and to judge the effectiveness of past decisions and actions. In managerial accounting, the process of setting goals, determining resource requirements, and devising a means of achieving goals is referred to as "planning." Monitoring financial results and measuring the outcome of planning processes within the enterprise is called "controlling." The person in charge of an entity's accounting department is usually called the "controller." The controller generally plays a key role in both planning and controlling endeavors throughout the organization.

The Cam Highland Tomato Sdn Bhd plans of management are formally communicated as budgets, and the term "budgeting" typically refers to management planning. The controller oversees the development of budgets by the accounting department, usually on annual basis. Budgets are commonly prepared not only for the overall organization, but also for divisions and departments within a company or institution. Budgets are important to the goal-setting function of an organization because they express the wishes and objectives of management in specific, tangible, quantitative terms.

Once a company's plans, or budgets, have been established, managerial accountants begin gathering information generated by the organization that indicates whether or not the company is achieving its goals. The accounting department presents its findings in the form of performance reports tailored for individual executives or departments. The detailed performance reports essentially compare budgets with actual results for a given time period, allowing managers to identify problem areas. For instance, Cam Highland Tomato Sdn Bhd sales and marketing managers may utilize data such as inventory levels and sales volumes to direct advertising and promotional programs.



Besides producing routine reports, management accountants also create special reports for other managers that help them to make decisions about proposed projects or problems that arise. Special reports are often created to analyze the relationship between costs and benefits related to different alternatives in the decision-making process. For instance, if a company's competitor drops its prices, management may ask the accounting department to produce a report comparing possible competitive responses, such as lowering prices, increasing advertising, or even changing its product or service. Such reports often involve forecasting as well as the collection of outside information.


4.3 Cost Information Information gathered by cost accounting methods within an organization make up most of the detailed data used to create managerial accounting reports and financial accounting reports. Understanding the costs associated with producing goods and services is vital to the decision-making process because that comprehension can help place a measurable value on the results of a company's individual decisions.

Four basic cost accounting activities that support the managerial accounting function are

a) Cost determination, which involves determining the actual cost of a product or an activity, such as marketing b) Cost recording, whereby costs are recorded in journals and ledgers c) Cost analyzing, which refers to accountants and managers analyzing the data to help solve problems and make plans d) Cost reporting, which entails showing the costs in detail, including showing how the costs were measured, what characteristics the costs have, and what the costs actually mean and how they should be interpreted.

As conclusion, management accounting has always concerned itself with information production, processing and reporting while cost and management accounting has sought to provide managers with accounting techniques involved in the production of cost information. Cost and management accounting is vital as its describe the application of the techniques to a broad range of managerial decision-making, planning and control activities.



Bruns, William J. (1999). Accounting for Managers: Text and Cases, 2nd ed. Cincinnati: South-Western

Don R. Hansen, Maryanne M. Mowen. (2003). Cost Management: Accounting and Control. NY: Thomson/South-Western Publishing Co.

Garrison, Ray H. (1996). Managerial Accounting. 8th ed. Boston: Irwin, Inc.

Raiborn, Cecily, Jesse T. Barfield, and Michael R. Kinney. (1998). Managerial Accounting. 3rd ed. Cincinnati: South-Western

Woelfel, C.J. (1986), "Standards of Ethical Conduct for Management Accountants", Journal of Business Ethics, Vol. 5 No.5, pp.365-71.


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