Methodological foundations of a practical model for calculation of production price of finished products inventories in sugar mill Sladorana d.d. Županja


Commissioned by: Sladorana d.d. Županja
Project duration: July, 2008 – December, 2008
Project manager: Mihaela Grubišić
Collaborators: Mihaela Grubišić, Mustafa Nušinović, Denis Redžepagić i Gorana Roje


Project outline: 
I. THE ANALYSIS OF THE PRESENT SYSTEM OF PRODUCTION PRICE AND FINISHED PRODUCTS INVENTORIES' CALCULATION 
   
1. The baseline analysis 
2. The analysis of the advantages and drawbacks of the current system of production price calculation and finished products' inventories valuation 
3. The starting concept and the key components of the model 

II. SUGGESTION OF A NEW MODEL OF PLANNING, MONITORING AND INFORMATION PROVIDING ON PRODUCTION PRICES AND FINISHED PRODUCTS' INVENTORIES VALUATION
   
4. The analysis of the technological process 
5. Identification of an alternative database and the determination of functional relations between the parameters 
6. Organisation of the new system – activities, data flows and reporting documents 
7. The structure and usage of the reporting documents 
8. Conclusive remarks and the conditions of the suggested model application 


Summary: 
The goal of this project was to determine market, technological, economic, financial and organisational parameters in "Sladorana" d.d. Županja, and to suggest a practical model of calculating production price and valuation of the inventories of finished products. 

In this study we analysed the present system of physical and financial monitoring of manufacturing process in "Sladorana" d.d. Županja. Our research focus was to determine all relevant physical parameters necessary for measurement of physical inputs of raw materials and the outputs of the production process - inventories of finished products. We tried to induce to what degree the financial reporting system in "Sladorana" d.d., Županja is related to physical inputs and outputs of the manufacturing process. By doing this, we have taken into account the specificities of current technological sugar and related products thereof as well as alcohol manufacturing. In addition, we have not neglected the planned improvements in the manufacturing process in the medium-term. 

After in-depth analysis of the relatedness of physical and financial evidence of the manufacturing process, we suggested the preconditions for introducing the alternative model of calculating production prices of finished products. This model would not only enable prompt comparison between the planned and realised inputs and outputs, but it would also help establish managerial accounting system in the company. We assess that current situation of financial monitoring of sugar manufacturing process is far from adequate as it serves to inform external users of financial statements only. Thus, there are no prompt information that could help "Sladorana" d.d. benefit from market opportunities by intensifying the variable products manufacturing such as cane syrup sugar or alcohol. Consequently, better business results cannot be achieved under current financial reporting system. 

Key words: information system, production price, managerial accounting, valuation of finished products

 

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