ABC Motors Case study.pdf

7/30/2019 ABC Motors Case study.pdf

1/23

Case Study

1. Introduction

The CEO of ABC Motors International, through an extensive evaluation process, has decided that his companyrequires an integrated software system. Having examined a number of possible solutions, he has determined thatSAPs R/3 system best suits the companys needs and growth, and has bought licenses for the FI, CO, SD, and MMmodules. Your firm has been contracted to lead the installation project that includes some business process re-engineering.

Your team, assigned to assist ABC Motors International in the implementation of this business system, is to build aworking prototype of the system and present it to the executive committee. Considering the attached informationgathered from the client, your talented consulting team should design and configure the organizational structure andapplicable master records to support the business. All appropriate posting documents and resulting accountingdocuments for each business transactions should be prototyped and tested. Document and justify any significantrecommendations. In your presentation, significant attention should be given to integration and to the flow ofbusiness through the supply chain.

The following key areas should be covered.

Planning issues encountered and their resolution.Integration points throughout the software.

Flow of business transactions.Problems and obstacles found in prototyping the proposed implementation model.

Attached is the information already gathered by your project team. You have limited access to the SeniorManagement Steering Committee of ABC Motors International to respond to questions you may have and providefurther information as required.

2. Background Information

2.1 Company information

ABC Motors International Worldwide has its head office in Laguna Technopark. The company sells motorcycles,

and accessories.

ABC Motors International owns AMI Marketing, a distribution company in Cebu that handles sales for VizMin area.Financial statements are prepared at the corporate and subsidiary levels. The data and the application server areon a computer in the head office.

2.2 Organizational Structure

The manufacturing plant in Laguna Technopark assembles all products sold by ABC Motors International. Inventoryis then transferred from the plant to the other distribution centers in Quezon City and Cebu. AMI Marketingprocesses all sales to VizMin customers.

Define the appropriate company codes in order to show the full range of required business functions in your

prototype. Assign the appropriate business for internal balance sheets. The fiscal year is identical to the calendaryear, however with four special periods. Each company code must have its own credit control area.

3. General Information

The suggested priority is to focus on delivering the prototype presentation.Consider the following:

Document No.SNPGN10002 Page 1 of 23

Copy right S.N.Padhi 2005http://www.surya-padhi.net/

Dated: Friday, October 07, 2005


2/23

Case Study

Taxes - Configuration of Taxation is not essential for the case studyPlants - Remember to use the copy plant function when defining additional plants.

After completing the essential configuration required for the prototype, you should investigate the configuration forother components of the case study

3.1 Master Data

G/L Account Master Data

Create one chart of account per company.

ABC Motors International (local currency PHP)AMI Marketing (local currency PHP)Automatic Account Assignment must be maintained so that the G/L accounts are posted automatically for theinventory management and invoice verification.

3.2 Bank Master Data

Enter the house banks and the related bank accounts for the respective company codes.

Bank City Bank Id Bank country ABA Routing No.

BPI Head Office BPI PH 11000430Citibank Cebu Citibank PH 11040305

3.3 Customer Master Records

Maintenance of customer master records is decentralized. Sales department first creates the customer master andthey establish the customer number to be used. The accounting department is then responsible to extend thisrecord to include the financial information. One of the project team members is the Credit Manager. He/she willdetermine the appropriate credit information for the credit controlling areas.

3.3.1 Account Groups

For regular customers create master records using external alphanumeric number ranges. For the one timecustomers create one master record for the Philippines and one for US. For the line item display for one-timeaccounts, sort by name and city.

Use field selection for the regular customer account group to control the following:Region, Industry and Terms of payment fields are to be mandatory.Sales district is to be suppressed.

The following reconciliation accounts should be allocated to the individual customers:

PH receivablePH receivable one time customer account

3.3.2 Incoterms

The following Incoterms are currently used by ABC Motors International and AMI Ltd.:


CIF Costs, insurance, freight




3/23

Case Study

CIP Cost insurance paidZEX Express Freight Chargeable

Payment Terms

The following payment terms are currently used:

PT01 8 days 5%14 days 2%21 days net

PT02 14 days 3%30 days 2%45 days net

PT01 is used by the ABC Motors International head offices and payment term PTO2 applies to all other customers(including trade industry)

3.3.4 Customers

The allocation of customers to sales organizations is determined by the assigned country and city listed in thecustomers master record. The customer listed below are interested in all product groups of ABC MotorsInternational.

The following customer represents the Cebu subsidiary. It is used for inter-company sales of finished goods:

CustomerAddressContact

CurrencyCountryLanguage

DistributionChannel

Terms ofPayment

AMI Marketing101Yonge Street

Rosa Ave., Cebu City

PHPPH

EN

Wholesale PT01

The following companies represent the customers (wholesalers and retailers) that ABC Motors International andAMI Marketing sells their products to:

CustomerAddressContact

CurrencyCountryLanguage

DistributionChannel

Terms ofPayment

Cycles Inc.64 West Ave. Quezon City

PHPPHEN

Wholesale PT02

3 Wheels Inc.

2115 Mt. Pleasant RoadParanaque344-4355Contact: Mr. Mendoza

PHP

PHEN

Retail PT02

Bikes R Us.12667 East Ave,Quezon CityContact: Ms. Nagin

PHPPHEN

Wholesale PT02





4/23

Case Study

X-TremeCycles315 North Ave.,CebuContact: Ms. Sy

PHPPHEN

Wholesale PT02

3.4 Material Master Records

Because of our commitment to quality, we have begun tracking changes to our key materials and products. Wewould like to see this practice continue through a change management facility that is built into the system.

We currently group changes by engineering/ design project numbers.

3.4.1 Finished Products

Material number Descripti on100001 500 cc Street Motorcycle-Black100014 500 cc Motorcross motorcycle-Green100025 750 cc Street motorcycle- Black100030 750 cc Motorcross motorcycle-Green

3.4.2Accessories

The product assortment includes accessories (trading goods) in number range 5. These items are only bought andsold and are not used in any way for production. The following materials are to be considered.

Material number Descripti on

500020 Sissy Bar500021 Screw Driver Grease500022 Black Leather Riding Pants500026 Lamp-Tiger eye Halogen500099 Six pack Old Sturgis Best Ale

3.4.3 Material Types

In ABC Motors International, the following material types are used, with the corresponding number ranges.The material type Bike will have to be created. Bike should have the same functionality as a Material type HALB(semi finished).

Beginning of range End ofrange

External/Internal

AccountCat. Ref

Finished products 100001 199999 External 0009Bike 300001 399999 External 0008Raw materials 200001 299999 External 0001Operating supplies 400001 499999 External 0002

Trading goods 500001 599999 External 0005Services 600001 699999 External 00063.4.4 Material Groups

For control and reporting purposes, ABC Motors International has decided on the following material groups:Acc AccessoriesOther OtherCycles Motorcycles





5/23

Case Study

3.4.5 Additional Information for Sales Department

The material master for finished goods is partially maintained. The sales department must maintain additionalinformation. The maintenance consists of the following:

Minimum order quantities for accessoriesDelivery plantLoading group

Transport groupStorage condition

3.5 Vendor Master Records

Vendor master maintenance for trade vendors are maintained centrally by Purchasing Department whilemaintenance of non-trade vendor masters is maintained by Accounting.

3.5.1 Account Groups

ABC Motors International normally purchases from a few, regulated suppliers. Where circumstances warrant, theoccasional use of additional suppliers is possible. By policy, ABC Motors International will deal with theseoccasional vendors using the systems one time vendor capability.

Account groups and number range information for vendors is in the following table:

Account group Descript ion Number rangeKRLV Local Vendors Internal numericKRFV Foreign Vendors Internal numericKROT One-time vendors External alphabetic

Other than for the one-time accounts, ABC Motors International will use internal number assignment. In order tofacilitate reporting and control, there should be two one-time vendor accounts: one for foreign and one for the

domestic suppliers.

The field status for the account groups should reflect a mandatory field for payment method.

The following reconciliation accounts should be used as appropriate.

Local vendors payableForeign vendors payable- one- time accountsUS vendors payableUS vendors payable- one- time accounts

For the line item display for one- time- accounts, sort by name and city.

3.5.2 Vendors


The following vendor master records need to be defined.




6/23

Case Study

SupplierAddressContact

Descript ion Terms of paymentValid currency

ABC MotorsInternational

1001 First StreetLagunaContact: Ms. Martha Aldeguer

Laguna Tech distributioncenter

PT01PHP

Wheels on the Go2811 West AvenueQuezon City

MotorcycleManufacturer.Supplier for theRoces Avenue Plant

PT01PHP

Top Design Corp.11453 Mockingbird LaneRoces Avenue, QCContact: Mr. Bert N. Erny

This company deals withsubcontract orders.Frames, color, and logo arethe materials to be provided.

Cleaners, Inc.

14793 Sct. TobiasRoces Avenue, QCContact: Mr. J un Reyes

Cleaning Service for Laguna PT02PHP

Paints, etc.234 Northridge Park,Chicago, ILContact: Todd Williams

Provider of paints and colors. PT01USD

4. Materials Management

All deliveries of materials will be entered as goods received by the inventory management department with invoiceverification performed by the accounting department.

4.1 Materials Master Data Material type

AMI uses the material type bike to describe all semi-finished products. The material type bike will have to becreated. Be sure that the new material type has all the functionally of the standard HALB material type.

4.2 Procurement

The following purchasing Groups are required:001 for procurement of accessories002 for procurement of services003 for procurement of motorcycles

Requirements for both Manufacturing and Marketing companies are ordered by one purchasing organization based

in Manila. However, there are Cebu requirements that are ordered locally but under the same purchasingorganization.

In addition, someone must consider the following points while ordering raw materials or semi-finished products:


After their in-house production, the frames are given to an outside company. Top Design, contracted for the special




7/23

Case Study

finish. The required finishing color and the appropriate logo have to be considered as raw material of ABC MotorsInternational.

Handling fee per frame: PhP25.00

Raw material costs for color (per frame): PhP2.50

Raw material costs for logo (per frame): PhP0.50

4.3 Valuation

ABC Motors International is valuing motorcycles at standard cost, accessories using moving average.

4.4 Physical Inventory Method

Because ABC Motors International uses annual inventory count, all company stocks have to be physicallyinventoried by the balance sheet cut-off date. During the counting, the warehouse for material movements must beblocked.

4.4.1 Materials Requirements Planning

AMI Marketing in Cebu orders motorcycles from Laguna, maintained through MRP. Material requirements planningwill be carried out for the creation of purchase requisitions and planned orders. The requisitions are thenautomatically converted into purchase orders. All requisitions that do not have an explicit source of supply assignedto them are to be converted manually.

Accessories are planned using automatic re-order point planning. Motorcycles are ordered based on manual stocksand Forecasts provided by the sales offices. ABC Motors International would like to utilize consumption ofindependent requirement.

4.4.2 Distribution Center Inventory

Using the prescribed methods above, replenish the inventory levels at the distribution centers for all salable

products.

4.4.3External Service Management

AMIs Laguna plant annually requires duet work cleaning and air filter replacement to the plant HVAC System. AMIRoces Avenue has selected though competitive bid Cleaners, Inc for the project. The cleaning contract is valued atPhP15000. The cost of this service should be allocated to all production cost centers. All payments to quickcleaning are subjected to service entry and acceptance of the actual services rendered.

5. Sales and Distribu tion

5.1 Organization

5.1.1 Sales Organization





8/23

Case Study

Business in the Philippines is divided into two sales organizations, one for the ABC Motors International and one forAMI Marketing. Each sales organization is responsible for negotiation and fixing of conditions and characteristics ofbusiness transactions.

5.1.2 Distribution Channels

Both the ABC Motors International and AMI Marketing sales organizations use two distribution channels throughwhich to sell their goods:

Wholesale trade

Retail trade

5.1.3 Divisions

The products of ABC Motors International are divided into three groups. All product lines can be sold through bothdistribution channels by both sales organizations.

Street motorcycles

Motorcross motorcyclesAccessories

5.1.4 Sales Offices

It has been decided to use sales offices to differentiate the sales made by the various regions. This will allow easyreporting of business volume by office. The following sales offices must be defined:

LagunaCebu

There is no freight charge or profit, thus there is no accounting implication re transfer of stock between distributionpoints.

5.1.5 Distribution Centers

As discussed earlier, Laguna is responsible for all manufacturing. The other locations Cebu, do not manufactureany products.

Inventory at the Cebu distribution center is replenished through plant transfers that result from sales forecasts.There is no accounting implication since ABC Motors International owns both locations.

The Marketing Company (AMI Marketing) purchases inventory in Cebu from ABC Motors International according toannual agreement. This agreement is in the form of a scheduling agreement, which outlines quantities and dates.

ABC Motors International serves as a vendor for AMI Marketing, and AMI Marketing is defined as a customer of

ABC Motors International. Therefore a scheduling agreement is created by ABC Motors International for the deliveryschedule of their customer AMI Marketing. The lines in the scheduling agreement appear as demand in the Lagunadistribution center.

5.1.6 Shipping Points

Each plant has two shipping points that are responsible for the processing deliveries. For normal delivery there is ashipping point which processes the bulk of the deliveries. In addition ABC Motors International offers its customersan express delivery options using Guaranteed Overnight Delivery (G.O.D) which guarantees delivery in one day





9/23

Case Study

anywhere in North America. This shipping point represents a special shipping area reserved for express deliveries.

Shipping point DescriptionR001 Laguna Regular deliveryREXP Laguna Express deliveryC001 Cebu Regular delivery

CEXP Cebu Express delivery

5.2 Functions

5.2.1 Pricing

Pricing used during order entry and invoicing is the responsibility of each sales organization. Therefore any materialpricing, discounts and surcharges can vary depending on the sales organization. It has been decided that eachsales organization is to have a separate pricing procedure to reflect its own pricing policy. Therefore certaincondition types procedure used for Canadian customers.

Furthermore, the distribution channel also influences pricing. A special discount is to be defined for wholesalecustomers, which reduces the gross price of the product. It has been decided that the price group field in thecustomer master will be used to determine if a wholesale discount applies. It would be possible to simply make thediscount dependent on the distribution channel alone, but the use of the price group field was decided upon since itallowed for multiple discount rates based different price groups.

The following conditions apply to pricing at ABC Motors International:

A basic material price is established for each sales organization scaled by quantity.

Customer specific material prices are possible

At 25%discount applies for wholesale customer orders

Pricing determined at order entry is firm and is not re-determined at billing time

The value of discount based on the terms of payment used should appear in the pricing details foran item.

Material cost should also be included in item pricing details along with the computed Gross profitmargin.

An addition freight charge should be included in the item in the case of express delivery. Theamount is dependent on the weight of the goods shipped and is triggered by a special Incoterms thatyou enter in the sales document for express delivery.

5.2.2 Availability checks and Transfer of Requirements

Both ABC Motors International and AMI Marketing., would like to track each requirement generated by a sales orderseparately. This means that individual requirements will be passed for the materials. The alternative would be toaccumulate demand into collective requirements for a day or a week but then the details of the source of therequirements is not available.

5.2.3 Shipping

The data required for shipping should be defaulted as much as possible by the system. Areas where thisdetermination is to be automated included shipping point, and picking location determination.

5.2.3.1 Shipping points





10/23

Case Study

The shipping point is specified for every order item. In the determination tables, one shipping point is specified asdefault and others can be specified as alternates. The default shipping point is influenced by the shipping conditionfrom the customer master, loading group from the material, and delivery plant. Ensure that two shipping conditions,one for regular and one for express delivery are defined as well as the related determination table. A single groupcan be used since all materials are located onto trucks using a forklift.

The shipping point should be determined as follows:

DeliveringPlant

ShippingCondition

LoadingGroup

Shippingpoint

Laguna 01 002 ROO1Laguna EX 001 REXPCebu 01 001 C001Cebu EX 001 CEXP

5.3 Addit ional Sales Information

Configure the system to satisfy the following requirements:

Use the standard order type available in the system to process regular customer orders. ABC MotorsInternational does not require specialized orders.

ABC Motors International has decided that in addition to the standard order type, credit and debit requests aswell as the return order type will be used. Configure the system so that these document types are available atorder entry but no others, e.g. Consignment order types.

It has also been decided that the business terms in the sales document header are valid for all items andcannot be changed at the item level.

The only partner function that can be different between items in a sales order is the ship-to-party. An incompletion procedure based on the standard procedure is to be used for order entry. However, do not

include the purchase order number in the list of fields to be checked. Also issue a warning message if weightsand volumes are missing.

Input facilities must be used in order to facilitate fast and efficient order entry by defining a product proposal.

5.4 Additional shipping Information.

The shipping must be processed optimally and quickly. The shipping team has decided the standard functionality isadequate and that the standard delivery document type will be used for sales orders. Due to the volume of deliveries expected, the creation of the delivery documents will be done daily using

collective processing. The exception to this rule is the case of a order where the customer has requested theexpress delivery option. For express delivery, the delivery document will be created separately for the individualorder.

Warehouse management will not be incorporated since the warehousing structure is not complex. However, thestorage location for picking should be proposed in the delivery document.

5.5 Additional Billing Information

Consider the following billing related requirements: A standard invoice related to a delivery is to be used. Customers normally receive individual invoices for each delivery. However, it has been decided that billing

schedules will be supported for customers who request it. Initially a bi-weekly calendar will be defined toconsolidate all deliveries into a billing date falling on the Friday of 2

ndand 4

thweek of every month.

The accounting department maintains customer credit limits. The credit control area is the organizational unit,which sets the credit limit for customers and controls it. A credit control area at ABC Motors International





11/23

Case Study

contains only one company code. For every sales document (order type etc) it can be determined, whether acredit limit check is warranted.

6. Financial and Cost Account ing

6.1 Document Processing

Enter the following document types. If necessary add the appropriate

DR Customer invoiceDS Customer Credit memoDZ Customer paymentKR Vendor invoiceKG Vendor credit memoKZ Vendor PaymentsSA G/L accounts

Use an internal number assignment with the corresponding number range intervals.

6.2 Organization Information

Both of the two company codes will roll up into one corresponding area. Define the controlling area and allocate itto the respective company codes.

Enter the basic data as follows:

Activate cost center accounting.The cost accounting currency in identical with the group currency of the company.Activate the charts of accounting.

The periods correspond to the periods of financial accounting, i.e. 12 accounting periods and four special periods.Company code check.

Maintain the controlling area currency and the two main currencies for the company code.Implement number range groups for activity related and period related activities in and actual.Allocate number ranges for those groups within cost center accounting.Complete data entry is only required in one company. Partial data entry is necessary in the other company todemonstrate aggregation of data at the corporate level.Design a line for AR, AP and GL to display all assigned currencies.

6.3 Cost Element Account ing

For primary cost entry and primary cost allocation take over the G/L accounts of 4xxxxxFrom financial accountinginto cost accounting. Therefore you need to analyze the chart of accounts and determine the appropriate costelement types.

Implement the respective secondary cost elements, statistics ratio and activity types for the internal cost allocation.

The validity period for cost elements and activity elements is from 01.01.2002 till 12.31.9999.

Statistical figures 91000(employees in ea.)





12/23

Case Study

Statistical Key figure 7800 (energy consumption in kWh) Activity type 1410 (repair hours) Activity type 1440 (assemble brakes ) Activity type 1450 (assemble motorcycles) Cost element for internal allocation 610000 Cost elements for cafeteria assessment 510000 Internal Order settlement cost element 650000

To group similar cost elements, implement the following cost elements groups:

Group Cost Elements

GOAS All other groups, object analysis sheetMaterial 40xxxx, 4150000Energy 4161000, 416200,416300Personnel 42xxxx, 43xxxx, 44xxxxxPlant maintenance 45xxxx

Taxes 46xxxxRents 47xxxxAssessment 510000

Activity allocation 610000Settlements 650000

6.4 Cost Center and Internal Order Accounting.

6.4.1 Cost Center Hierarchy

Set up appropriate standard hierarchies for your controlling area:

K00 Standard hierarchy, ABC Motors.

K99 Clearing cost centers

K99X6 Clearing cost centerX16099 Clearing cost center

K00X ABC Motors International,

K00X1 General cost centerX11000 general cost centerX11100 real estate/buildingsX11200 cafeteria

K00X2 Service cost centerX12000 service cost center

X12100 plant maintenanceX12200 internal transportation

K00X3 Production centerX13000 production centerX13100 street motorcycle assemblyX13200 motocross motorcycle assembly

K00X4 Material center





13/23

Case Study

X14000 material centerX14100 material purchaseX14200 operating funds purchase

K00X5 Distribution and AdministrationX15000 administrationX15100 managementX15110 sales LagunaX15210 sales ChicagoX15310 administration LagunaX15410 administration Chicago

Create the standard hierarchy for the PH (where X=1) and US (where X=2) following the chart above. K001 e.g.would represent the cost centers assigned to the Philippine Company code and K002 would represent all costcenters in the US Company code.

Not all cost centers are relevant for both companies.

Configure cost centers for all primary and secondary costs for actual and planned postings. Service cost centersalso have to be managed on a quantity basis.

The cost center currency corresponds to the company code currency. The validity period for the cost centers is from 01.01.2002 until 12.31.9999 Assign the cost centers to a business area of your choice.

6.4.2 Internal Orders

The ABC Motors international has decided to attend a rally held in Clark Field, Pampanga each year to promotetheir street motorcycle model. In an attempt to prove that there is actual business value to this annual free for all,the marketing manager has requested to see a detailed analysis of the commitments and the actual costs. Aninternal order will be used to track and report these costs. The costs will be settled to the sales Laguna cost centeronce all costs have been accounted for. In addition AMI maintains strict budget controls over the actual costs.

Create an internal order type for promotions and marketing events that allows recording commitment items.6.5 Planning

The prices for activity types should represent given standards and not calculated values. Generate a plan for thefollowing key figures, activity types and cost elements in the PH Company. Check with production for additionalrequirements.

6.5.1 Statist ical Key Figure Planning 9100 No. of employees.

To apportion the cost of the cafeteria corresponding to the no. of employees of the single cost center, the ratio forthe following cost centers must be planned as a constant.

General Cost center 15 employees

Service cost center 45 employees

Street motorcycle assembly 50 employees

Motocross motorcycle assembly 60 employees

Material 25 employees

Distribution and administration 20 employees

6.5.2 Statistical Key Figure Planning 7800- Energy consumption





14/23

Case Study

To apportion the cost of energy corresponding to the planned energy consumption rates of the single cost center,the key figure for the following cost centers must be planned as a constant:

General cost center 1000kwh

Service cost center 1500kwh

Production 13000kwh

Material 1500kwh

Distribution 3000kwh

6.5.3 Activi ty Type Planning 1410 RepairThe activity type repair must be planned on cost center X12100 plant maintenance with the following values:Planned activity 2000hrStandard rate PhP45.00/hr

6.5.4 Activity Type planning 1440- Assembly BrakesThe activity type assemble brakes must be planned on cost center x13100 street motorcycle assembly with thefollowing values:

Planned activity 20000 hr.

Standard time PhP15.00/hr.

The activity type assemble brakes must be planned on cost center X13200 motocross motorcycle assembly withthe following values:

Planned activity 25000hr

Standard time PhP15.00/hr.

6.5.5 Activity Type planning 1450-Assembly Motorcycles

The activity type assemble motorcycles must be planned on cost center X13100 street motorcycle assembly withthe following values:


Standard time PhP18.00/hr

The activity type assemble motorcycles must be planned on cost center X13200 motocross motorcycle assemblywith the following values


Standard time PhP19.00/hr

6.5.6 Direct Planning

Generate a plan for the following cost elements in ABC Motors International:

Cost center X11000- General CC

430000 salaries PhP150, 000.00 yr.415000 salaries PhP 80,000.00 yr.

Cost center X11200 - Cafeteria

415000 cost for external procurement PhP120, 000.00 yr.421000 indirect labor costs PhP60, 0000.00 yr.430000 salaries PhP100, 000.00 yr.





15/23

Case Study

Cost center X12000 - Service

415000 cost for external procurement PhP150, 000.00 yr.421000 indirect labor cost PhP80, 000.00 yr.

Cost center X13000 - production

415000 cost of external procurement PhP100, 000.00 yr.430000 salaries PhP100, 000.00 yr.

Cost center X13100 Street motorcycle assembly

400000 other raw material PhP400, 00.00 yr.420000 direct labor cost PhP480, 000.00 yr.430000 salaries PhP100, 000.00 yr.

Cost center X13200 Motorcross motorcycle assembly

400000 other raw material PhP500, 000.00 yr.420000 direct labor cost PhP500, 000.00 yr.

430000 salaries PhP110, 000.00 yr.

Cost center X14000 material center

415000 cost of external procurement PhP350, 000.00 yr.430000 salaries PhP200, 000.00 yr.476000 office supplies PhP25, 000.00 yr.

Cost center X15000 - administration

430000 salaries PhP200, 000.00 yr.476000 office supplies PhP40, 000.00 yr.476500 general management costs PhP100, 000.00 yr.

Cost center X16099 - Clearing

416100 Electricity, fix PhP10, 000.00 yr.416200 Electricity, variable PhP190, 000.00 yr.

Add some plan data for the AMI Ltd.

6.5.7 Planned Assessment

Costs have been planed and entered into the cafeteria cost center. Within the framework of plan assessment, thecosts will be assessed based on the number of employees within the corresponding cost centers. Enter thecorresponding sender recipient relationship.

6.5.8 Internal Order Planning

Plan the following costs for the Clark Field Rally & Beer Drinking Exhibition order:

Travel Expenses 10,000





16/23

Case Study

Exhibition Booth Rental 1,200Promotion Material (including beer) 36,000Miscellaneous Expenses 250

6.6 Actual Costs recording

6.6.1 Business transactions

Ensure that primary costs from MM and SD have been recorded in the cost centers. Create purchase requisitionsfor accessories and liquid supply you intent to use on the rally. Process the requisitions forward to partial goodsreceived.

In addition, enter the following FI transactions:

Customers and vendors invoices, debit and credit memos on cost center

Energy cost on the collective cost center

Direct labor costs and salaries on material cost center

Indirect labor costs on overhead cost center

Actual costs for the Clark Field Rally

6.6.2 Internal cost AllocationReproduce the following actual transactions for the internal cost allocation posting of statistical key figure 9100

General cost center 15 employees

Service cost center 45 employees

Material 25 employees

Distribution and administration 20 employees

6.6.3 Actual Assessment

Perform an actual assessment similar to the planned assessment.

6.6.4 Actual Order Settlement

Perform a settlement of your Clark Field Rally Order To the Roces Avenue sales cost center.

6.7 Reporting

Analyze the corresponding transactions in view of cost centers and cost elements.Perform a customer account analysis.Display vendor or customers line items and drill down to originating documents.

6.8 Closing operationsA limited month-end closing should be completed in the respective company codes based on the current month.

Therefore, it is necessary to close the accounting period by the last day of the month and to open the new period forthe next month. Maintain the corresponding tables. Draw up the preparation of balance sheet and a profit and lossstatement. Identify the account balance changes from prior month and reconcile the differences to thecorresponding transactions.

6.8.1 Financial Statements

In order to prepare balance sheet and profit and loss statement at the subsidiary level, a financial statement versionwith the corresponding hierarchy levels has been created.

Version Name: MSCA





17/23

Case Study

Each group is totaled and sub-totaled. Each position has its allocated text. G/L accounts have been allocated to thelowest level. Revise if necessary.

7. Product ion Planning (Bonus Portion)

7.1 Work CentersThe following work centers are available.

SMBRAKE Street Motorcycle Brake Assembly

MCBRAKE Motorcross Motorcycle BrakeAssembly

SMASSM Street Motorcycle Assembly

MCASSM Motorcross Motorcycle Assembly

EXTSUB External Sub Contracting

These workcenters are assigned to cost centers and activity types as defined by controlling and productionmanagement. The quantity of resources in the workcenter must match the quantities budgeted in controlling.

7.2 Capacity

Assume all work centers are not hierarchically structured and have the following capacity.

Start time 8:00 a.m. Stop time 6:00 p.m. One hour break time at lunch. Effectively at 80%.

At each work center labor capacity is to be evaluated. The available capacity should be adapted after a planning runwith capacity evaluation. Discuss possible bottlenecks and discuss methods to solve the problem.

7.3 Routings

7.3.1 Routings for the brake assembly

Assemble front brake. Assemble rear brake Quality inspection.

7.3.2 Routings for the frame assembly

Paint the frame Apply letter and AMI Screaming Eagle insignia.

Inspection

7.3.3 Routings for the final assembly.

Assemble components according to drawing number Quality inspection.





18/23

Case Study

7.4 Bills of Material

7.4.1 Bill of Material of motocross motorcyc le

Docume .SNPGN10002 Page 18 of 23


nt No


Motor Sports International Bill of Material Motocross Motorcycle.

500cc Motocross Motorcycle

100014

Frame Painted

Green 71005

Frame

Aluminium

Color green

20022

Brake Assemble

70033

Brake30020

Brake Lever

30023

Wheels

70030

Saddle70025

Screwdriver

30096

Shift Assembly

70055

Gear Shift XTR

RDM 900

70043

Bearing

30112


19/23

Case Study

7.4.2 BILL OF MATERIAL STREET MOTORCYCLE





Frame Painted Black

70005Brake assembly

70033

Wheels

70032

Shift assembly

70055

Handle Bar70031

Frame Painted Black

70005Brake assembly

70033

Wheels

70032

Shift assembly

70055

Brake

30020

Brake Lever30023

Saddle70035

Screw drive30096

Shift Assembly

RDM 900

70043

Frame Aluminum

20005

Color Black20012

Bearing30112

500 c:c Street MOTOR CYCLE

100001


100001


20/23

Case Study


Frame Painted Black

70005Brake assembly

70033

Wheels

70032Shift assembly

70055

Brake

30020

Brake Lever

30023

Brake Line

30024

Brake Disk

30026

Brake Pull

30028

Saddle

70035

Screw drive30096

Foot Rest

70036

Engine 750c:c

75002

Handle Bar

70031

Shift Assembly

RDM 90070043

Bearing30112

Frame Aluminum

20005

Color Black20012

Character

20020

Gearing Selector

30099


100025

Brake Pull30028





21/23

Case Study

7.5 Materials Requirements PlanningMaster production schedule / materials requirements planning needs to be carried out for the creation of dependentrequirements & planned orders. The planned orders need to be converted to production orders on all levels of theassembly.

7.6 Production OrdersThe production orders should make use of the bills of material & routings. The assignment of materials to theoperational steps is maintained in the routings. Component availability checking should include production ordersand purchase orders at the time of the creation and only on-hand available stock at the time of the release of theproduction orders. Confirmation of the last operation in the routing should trigger a goods movement to inventory. Ifthe automatic goods movement ever fails a rework goods movement should be processed.

7.7 Capacity Planning

The capacity planning is used to identify bottlenecks in available production capacity. In the case that these exist,pre-production is increased in the month of least demand. If this is not sufficient, the earliest date available topromise is determined.

Prototype Presentation

A number of core business functions have been identified. The supporting R/3 transactions are to form the basis forthe presentation made to the steering committee.

1. Demonstrate your Implementation project. Due to the lack of time no resource assignment and documentationis required.

2. Display the beginning Balance Sheets and P & Ls for the two subsidiaries.

3. Demonstrate the pre-planning in Cebu and the demand transfer to the production plant. Execute MRP formaterial 100001 in the production plant.

4. Create a purchase order for the vendor Wheels in Motion.Convert one of the requisitions generated by MRP into a Purchase Order.

5. Receive inventory against the purchase order

6. Show the service PO created for HVAC cleaning services in the Roces Avenue plant.

7. Demonstrate service entry and acceptance for HVAC cleaning services.

8. Invoice Verification.Use invoice verification to record the invoice from vendor Wheels in Motion.

9. Create a customer sales order for the Chicago sales office.

Customer, All Terrain Cycles places an order for express delivery as follows:Material Quantity100001 100 PC100025 75500026 50500022 50

Verify the following are correct:





22/23

Case Study

Shipping point

Delivery Plant

Pricing

Process the delivery for this order. All materials are to be fully delivered. Complete picking and goods issue.

Ensure that the storage locations were defaulted accordingly.

10. Create the billing document for this delivery.Create the billing document and ensure that the posting to financial accounting is successfully completed.Examine the accounting posting to validate the general ledger accounts used.

11. Create a returns order with reference to the sales order.The customer has called and complained about the quality of the finish on some of the motorcycles theyreceived. Create a returns order for 5 pieces of material 100001.

12. Create the delivery for the returns order.Post goods receipt for the return of the damaged goods.

13. Create the corresponding credit memo.Create the credit for the returns order and examine the accounting posting.

14. Post an incoming payment.Receive a payment from customer X-Treme Cycles. A deduction was made for PhP23.00 for excess freightcharges and USD27.00 for arriving 3 hours late. We have agreed to absorb the PhP23.00, however theUSD27.00 still owes and should be recorded using a notation of 'item in dispute'.

15. Post a vendor invoice using an account assignment model.An invoice has been received by the landlord for the rent to be charged for the month.

The charges are always recorded to the same cost centers prorated by the sq. footage for each cost center.Cost center Sq footage11000 100012000 1200

15000 900

16. Generate a payment run for all the outstanding invoices.The payment run should contain at least 3 invoices, one of which is blocked from payment. Create anappropriate blocking reason.

17. Perform an assessment.The cafeteria costs will be assessed based on the number of employees.

18. Display the profit and loss statement forABC Motors International.Display a financial calendar showing all payment runs and financial statements. Include a message, whichreminds the controller when the month-end reports are finished and ready for preview.

19. Demonstrate the completion of the partial delivery for your Clark Field order.

20. Perform an actual settlement of the Clark Field rally order.

21. Be prepared to show and discuss the Cross Company Stock Transfer requirement between AMI ltd. and ABCMotors International.

22. Close the month and reconcile the Balance sheets and P & Ls for the two subsidiaries to the prior month.





23/23

Case Study


Copy right S.N.Padhi 2005http://www surya padhi net/

Documents

ABC Motors Case study.pdf