In theory, when in business, a transaction should run nice a smoothly for both parties. From making the actual product to the customer receive it, things usually will go wrong doing the process like for an example, during the process of making t-shirts, an over confident new employee believes they can imprint company designs and logo on shirt. However, he messes up. Now, what can the company do with the shirts that are not up to company standard? Depending on the industry, you are involved in; every company will run into these types of situations and will not know how too correctly account for the loss of inventory or product. In the general inventory section, non-sellable products fall into three main categories Spoilage, Rework, and Scrap. Depending on how the company is ran they fit into one of categories.
Spoilage deals with products that are not up to the companies or customer’s specifications. The product is either discarded or sold at a discounted price. Spoilage splits in between two different groups, normal and abnormal spoilage. Abnormal spoilage is spoilage that is not connected with the production process and would not arise from efficient operation conditions. Abnormal spoilage can be avoided from because if everything went according to plan or process, then there should have been no spoilage. An example of abnormal spoilage is if an ice cream company was producing a massive mixing batch. During the regular routine process out of nowhere, the machines breaks down. All the ice cream that was in the process of being mixed is now been wasted. However, if the mixing machine did not break down, the no wasted materials could have been avoid. The cost of abnormal spoilage is treated as an expense. On the other hand, we ha...
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...acturing Overhead Control.
When in business, any cost that is avoidable, measures will be taken to make sure that unnecessary costs do not happen. For example when a company has records for scrap material, the management team objective would be to optimize all the use of materials. On the other hand for abnormal spoilage, if all of the machines were well maintained, they would not break down causing the company to not loss materials. With rework, communication is key. The basic idea of entrepreneurship deals with what the customer wants, they get at a correct cost. According to the contract that was initially made, if they want the product to be dark blue, he is expecting to receive the product to be dark blue. If the company puts into place appropriate controls, the company can avoid many unnecessary costs causing them to keep more money at the end of the year.
The entrepreneur role, manager should play but frank's was unable to turn the problems and opportunities into new plans for improvement e.g. in the meeting when one of his subordinate engineer in the meeting recommended for the new testing equipment which would lead savings in labor and improved, the frank denied immediately without having discussion on that even the machine is able to pay back its value w...
Paper #6 Inventory Accounting Inventory accounting is exceedingly important to a firm because inventories are a significant asset to the firm both in absolute size and proportion to all of the firm’s other assets. Furthermore, selling inventories more than its cost price represents the main source of a firm’s sustainable income. For a typical wholesaler or retailer there is only one inventory account called the Merchandise Inventory. For a manufacturing company there are three categories of inventory accounts which are Raw materials inventory, Work-in-process inventory and Finished goods inventory (Revsine, Collins, Johnson, Mittelstaedt & Soffer, 2015).
Usually, businesses tend to keep inventory levels high so as to effectively meet uncertain and quick changing demands of its customers. However, keeping high inventory always proves costly for them. Thus to reduce warehousing or storage costs, these companies hold limited stocks of products just enough to meet fluctuating consumer
In manufacturing, inventories of raw materials allow companies to operate independently of their sources of supplies. Day to day operations are not dependent on deliveries from supplies since stock of the necessary materials are maintained and used s needed. Without inventory control, millions of naira could be lost year because of non accountability of stocks and inaccurate checks and balances. The process of control and management of inventory is a very important factor in the success or failure of any business. For example, little stock will result in stock out which will disrupt the production distribution cycle that is crucial to the survival of all manufacturing companies while too much stock will tie down the resources of a company. Poor or inadequate inventory management can present a serious challenge to the productive capacity of a manufacturing organization. In addition to raw materials and finished goods, many companies also maintain items of assets, property, inventories of work in progress, office supplies, business firms and general operation
In the competitive world there are many a companies who are in investing and ready to pump in millions of dollars for the sake of quality, perfection, reduction in complaints, customer satisfaction, customer delight, quality of service, value of production etc.
An inventory valuation allows a company to provide a monetary value for items that make up their inventory. Inventories are usually the largest current asset of a business, and proper measurement of them is necessary to assure accurate financial statements. If inventory is not properly measured, expenses and revenues cannot be properly matched and a company could make poor business decisions.
Entrepreneurs need to learn to exercise systematic innovation. Successful entrepreneurs attempt to produce value and add by projecting high. They are dissatisfied merely to improve on the already present resources or change the present resources. The attempt to create fresh and distinct values by altering stuff into a resource or aggregating resources in a new and productive form to a greater
“Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies. It is said that the ultimate goal of any effective supply chain management system is to reduce inventory (with the assumption that products are available when needed)” (Search CIO, 2006)
Problems that will be subjected to customer who ignorantly bought the spoilt products or food may result in food poisoning, nutritional value and taste change. Uncooked meats and eggs are the usual suspects when it comes to food poisoning, but any food that has expired might lead to a growth of the bacteria that can lead to food-borne illness. Products in bad condition which may cause dangerous illness happened. For example, food poisoning occurs when consumers consume dangerous bacteria that are able to grow more easily on expired foods. This is most likely to occur with perishable foods such as beef, chicken, eggs and prepared foods such as macaroni salad or potato salad. In the aspect of nutritional value, the nutrition that a person obtains from an expired food is far less compared to the fresh foods even though the food label indicates that a food is highly nutritious. Furthermore, even if the expired food you eat is safe for consumption, it might not taste as good as if you ate it sooner. As time passes, the quality of the food decl...
An acceptable technology, a specified and robust inventory management strategy, an adequate inventory record keeping and auditing, and specified performance measures are the most important inventory related working conditions. Management, first and foremost, must give priorities and expectations that are necessary for accurate inventory records.
The aims of inventory management are the following: a) provide both internal and external customers with the required service levels in terms of quantity and order rate fill, b) ascertain present and future requirements for all types of inventory to avoid overstocking while avoiding ‘bottlenecks’ in production, c) keep cost to a minimum by variety reduction, economical lot sizes and analysis of costs incurred in obtaining and carrying inventories, and d) provide upstream and downstream inventory visibility in the supply chain.
...sary for successful exploitation. (Hisrich, Peters, & Shepherd, Entrepreneurship 8th Edition, 2009) Sometimes there are also such situations that after creation process of something people do not know what to do next and the whole idea die. Another disadvantage of creativity role in entrepreneurship in the words of Teresa Amabile is that creativity was considered unmanageable, too elusive and intangible to pin down and because concentrating on it produced a less immediate payoff than improving execution, it hasn’t been so famous among most entrepreneurs attention. (Khaire, 2008) She also stated that creativity by itself will not provide success to the enterprise, in order to succeed there must be two others essential things such as: expertise and motivation, without which it will be mostly impossible to succeed for the companies in this highly competitive market.
In any organizations management would have to contend with any unavoidable changes that might take place. New machines, equipment, unstable business environment etc. can bring these changes. Successful implementation of the product therefore depends on the ability of the management to deal with the changes and resolve any emerging conflicts there from.
To cope with the dynamic and challenging business environment, entrepreneurs need to create and innovative products or services. In the production of the products and services they should be able to succeed otherwise, the competitor in the market will overpower them.
Every entrepreneur endeavours to carry out their business venture with an expectation of achieving profit, success and competitive advantages in business arena. So, in order to define the term “entrepreneurship” it refers to such an individual who comes up with innovative and creative business ideas by which he or she can earn economical benefits from capital market (Baum et al 2014). Therefore, entrepreneurship is a process of evaluating effective ways by which an entrepreneur can easily combine the resources with market value, and that will be beneficial for the entrepreneur to gain huge success and profitability in business. Moreover an entrepreneurship also refers to such business activities which can create both monetary as well as non-monetary benefits for an entrepreneur. According to (Bohari et al 2013), an entrepreneur is a person who has the