Company’s Performance Analysis

Questions: 1. Explain with justifications your assessment of the Companys 2015 performance based on the data and information provided above. Show your computations supporting your assessment on an attachment. 2. Identify and explain with back-up data/justification how ABCLtd may be able to regain its lost market share and increase the share to 45% by 2021. Explain how your suggested action(s) will achieve the Companys objectives. Show your computations supporting your assessment on an attachment. Answers: Solution to requirement 1: For product X, the actual material cost per unit is above the budgeted cost, which implies that the material has been purchased at an unfavorable pice. Direct labour cost per unit is lower than the budgeted cost, which means that labour is efficiently and favourably utilized due to efficient material usage. For projectY, the material costs remain stable, the labour is inefficiently utilized since actual labour cost exceeds budgeted labour costs. Solution to requirement 2: The company should keep a check on the prices at which the materials are purchased from the outside suppliers. Also, the labour should be effectively and optimally utilized in the production of ProductY. The company can achieve its desired market share only by optimum utilization and pricing of the direct materials and by reducing its overall costs, it can only maximize profits.