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dc.contributor.authorVaneylen, Mathias
dc.contributor.authorLombana Rodriguez, Monica
dc.date.accessioned2021-04-27T19:02:07Z
dc.date.available2021-04-27T19:02:07Z
dc.date.issued2018
dc.identifier.urihttp://hdl.handle.net/20.500.12127/6905
dc.description.abstractFor a period of 8 weeks, the researchers examined the cost calculation of a Belgian manufacturing company. The company is a specialised producer of a wide range of entrance mats with a focus on providing high quality and service. The main challenge regarding its existing costing system is that it became too complex and was allocating overhead costs to different products and customers in the same way, which can impact the company by influencing inaccurate pricing policies. Therefore, the aim of this project was to deliver a new costing tool, built from scratch, that allocated overhead costs to the level of products (1 square meter of mat) and customers. It also needed to reduce the complexity where possible, compared to the existing tool. It should be easy to maintain and update as well in the future. After consulting papers including different options of costing systems and based on the courses received during the Masters in Financial Management, the researchers decided to go for the development of a time driven activity-based costing tool (TDABC). By observation, collecting information and conducting surveys and multiple interviews the data was obtained that formed the input for the new costing tool. In this respect, different steps were followed based on the literature review. First cost departments were formed. Subsequently, information regarding activities was obtained. Regarding white-collar employees this was done through surveys and follow-up interviews. As for the manufacturing departments, a process chart was developed along with estimations of timing per activity. This made the researchers able to calculate capacity cost rates. In the final stage, costs per product and customer were obtained in a model. As a result of the undertaking of aforementioned steps and frequent interaction with the management of the company and its key employees, a new costing tool was developed. This model contains a starting page, followed by two input sheets and a final output sheet. It can be seen as a user friendly, easy to update and intuitive tool. Costing models are however, always a work in progress. The model developed by the researchers can be a good basis for further development in the future of the company. The output sheet is a matrix with different products and their respective lines of costs. Direct materials, labour costs and overhead costs are shown. These columns are followed by a cost to serve section. With respect to the latter, different choices regarding types of customers and markets can be made to arrive at a final cost price. The model also has the option to include costs of capital in it by clicking on an enable button. The cost price results show that certain high-volume products are currently over costed, whereas other high-end products that are sold in lower volumes are being under costed. A main factor that has caused the new model to calculate those prices is the allocation of overhead costs. These group of costs were significantly reduced compared to the previous situation through the identification of activities. General overhead costs amounted to EUR 473,167, representing 21.26% of total identified costs with the exclusion of raw material costs (a turnover of EUR 4.5 million was realised in 2017). Products were allocated general overhead costs (costs without a link to departments, products or customers) via the use of weighted square meters (weights were determined based on product sophistication and complexity). Finally, costs to serve were analysed for three main markets per order. As such, a comparison could be made with historical selling prices available for those markets. This analysis showed that certain Belgian customers turned out to be more profitable than others. Dealers were the most profitable ones. On the other hand, lots of costs were allocated to orders for carpenters since they required relative high effort by the company to serve. The company's main client Storax also had a cost that was slightly higher than its current price. Although the cost to serve this customer is still relatively low, it still required some effort by the company (driving up costs). Furthermore, the researchers observed that the difference in marketing costs that were not allocated to this customer as opposed to other customers was not high enough to certify the high wedge in historical prices compared to Belgian customers. As a consequence, actions such as efforts to increase the number of orders regarding unprofitable customers or to make these more efficient are advised.
dc.language.isoen
dc.titleProduct and customer cost analysis for a Belgian mat manufacturing company
dc.source.numberofpages193
vlerick.knowledgedomainAccounting & Finance
vlerick.supervisorSlagmulder, Regine
dc.identifier.vperid39319
vlerick.companynameVerimpex Matting
vlerick.companysupervisorD'hont, Bruno
vlerick.programmeMFM
vlerick.typebusresprojectIn-Company Project


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