Billabong’s professional consulting report
Paper , Order, or Assignment Requirements
The page limit includes title page, table of contents, executive summary, conclusion, as well as main tables and diagrams that are included in the body of the report.
-the organization is Billabong,If the organisation has multiple product divisions, you can choose one product category to focus on. For example, if your organisation is Unilever, you could focus on icecreams, deodorants, or another product category (as long as the category contains multiple products).
-You are a consulting team hired by the Chief Financial Officer (CFO) of your organization (see above). Your team has been asked to prepare a report to address product costing issues in the organization. Your report is to have three main parts.
Part 1 – Business Processes
Your team is required to present a value chain analysis of the product category of your organization. Your team should present:
1. A value chain model that has been tailored to the specific industry context, operations and characteristics of your organization and the selected product category.
2. The major points of cost incurrence in the value chain for your product category.
Part 2 � Costing System
Your team is to design a costing system for the product category of your organisation. The costing system must be based on the principles of Activity Based Costing (ABC). Assume that your organization has not adopted ABC and currently uses a conventional costing system. Your team should present:
1. A brief outline of what ABC is and how it differs to traditional costing systems.
2. A brief outline of the benefits and disadvantages of ABC for your specific organization.
3. Presentation of a product costing system that can be used to cost products in the product category you
have selected. The system must incorporate overhead allocation based on ABC principles. You need to:
a. Identify relevant direct cost pools and indirect activity cost pools (we recommend no more
than 6 activity cost pools).
b. Identify cost drivers for each activity cost pool.
c. Specify whether the activity cost pools are at the unit, batch, product or facility level.
Part 3 � Product Costing
Show how your costing model can be used to cost products for your business. Select one product as an example from the product category of your organization and estimate the full product cost (direct materials, direct labour, and overheads). All estimations and assumptions for direct and indirect costs and drivers must be clearly justified and referenced. Direct costs can be estimated for the selected product only. Overhead allocation rates should be estimated for all products in the product category, and then allocated to the example product, based on estimated overhead driver usage. Supporting cost data, assumptions, tables/diagrams etc. may be shown in appendices.
You can make the following assumptions:
1. All products in your product category are produced in a single factory in Australia.
2. Production is for the Australian market only.
Some cost information is publicly available, while other costs will need to be estimated based on available information and realistic assumptions. For example:
1. Direct materials: if you are costing a chocolate bar, then the main ingredients can be identified and costed (e.g. cost of flour). Remember, the costs are for the organization, not what you would pay at the supermarket!
2. Direct labour: identify the types of labour likely to be involved in manufacturing the product. Wages for different job types can be located on the Internet.
3. Overheads: some costs will be publicly available (e.g. electricity rates) while other costs will have to be estimated based on assumptions. Some overheads may be estimated from annual report information
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