Performance Management and Control

This document discusses the concept of performance management and control, with a focus on Fondant Cookies. It explores the growing cookies market in Australia and the business concept of Fondant Cookies. The document also provides information on the cost structure of Fondant Cookies, including direct costs, direct labor, and overhead costs. Additionally, it discusses the vision and goals of Fondant Cookies.

PERFORMANCE MANAGEMENT
AND CONTROL
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Fondant Cookies
Cookies market in Australia is one of the growing field. As per CAGR 2%
increase in growth rate recorded and is expected to grow in upcoming 2019-2024. It
is analysed that form the past years form 2014-2017 interest of customers towards
healthy diet increased. Cookies companies are also introducing nutritious, high
protein and low fat cookies for health conscious people. Cookies remain soft and
crispy and also easy digestive. There is no harmful impact fall upon health of
digestive and low fat cookies. Considering the increasing trend of cookies in
Australian food market and craze among public for biscuits and cookies a business
concept is proposed named “Fondant Cookies” to the market. The cookies are made
up of flour, butter, sugar, eggs. The cookies would be of full of fiber and protein
contents. This will also good for children and adults. Product will be available in
various flavours as glucose, fruit & nut, butter cookie, orange and chocolate. The
revenue growth presents increasing figures. In Australia customers asks for light
snacks with hot drinks like coffee and rea. The trend of cookies and snakes
increased in Australia since last 7-8 years. Due to health consciousness and
awareness for healthy diet might be considered one of the essential element subject
to increase the trend of cookies in Australia.
Vision
Vision
Our aim is to provide real people with real nutrition. We are confident in
providing good, healthy, fresh and flavourful drinks and snacks –crafted from
carefully produced, cooked, grilled or baked products. People who love our food, suit
their lives, fuel their bodies, and feed their souls. Our principles were the soul of our
organization, they embody what has always stood for our business and our
employees. In our constant attempt to grow and evolve, we believe in these
principles and the underlying actions that set forward a clear and concise request-to-
action.
Discuss goal (long term and short term)
Spreading a real taste of cookie to Australians is the key objective of “Fondant
Cookies”. the long term objective of the business concepts indicates towards
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grabbing global opportunities as North America, Asia and America. Being a market
taste leader in Australian and New Zealand’s market is the key goal of organisation.
Standard Cost
Direct Costs
The costs have been based on the cost of raw materials that were obtained
from Coles Supermarket and Bake Boss. Direct cost basically stats for an
expenditure directly initiated to production or manufacturing process of organisation
(Khamooshi,
and Golafshani, 2014). The figures present a standard cost aspects regarding the
direct material cost. The below cost structure of Fondant Cookies presents the cost
of raw material at initial level. There are following ingredients are required as flour
@$1.80, sugar @$1.80, butter @$7.00, eggs @$4.20, vanilla extract @$10.25,
almond extract @$1.10, direct cost for icing and decoration is categorised as
sprinkles @$22.38 and fondant @$13.20. the total cost would be paid by Fondant
cookies $26.26.
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Direct Labour
Direct labour states in terms of time per batch in which the active prep
(Cookie) is recognised as $25 with 60 batch, active prep (Fondant) as 30 batches of
$12.50, decorating as 30 batches minutes @$12.50, packaging of 15 time per batch
as @ $6.25 and clean-up of time per batch the total labour cost of $62.50 is
estimated. The cost per cookie presents an active Prep (coockie) @$0.50 and 1.20
minutes per Cookie, active prep Fondant @$0.25 within 0.60 minutes, decorating
@$0.25, packaging @$0.13 within 0.30 minutes and @$0.13 for clean-up cost. The
total labour cost per cookie calculated as @$1.25.
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Estimates of Overhead Costs
As this cookie business can be run out of my own home, to estimate the
utilities costs per month, I have gathered my previous electricity, gas, water and
body corporate bills and averaged the amount. There are two type of overhead cost
is considered in organisational context as variable overhead and fixed overhead cost
(e Waal and Kourtit, 2013). In the proposed business the variable cost of would be of
utilities with monthly cost of $407.14 which will be allocated in labour hours among
100 drivers. Overhead rate will be $4.07. Monthly overhead cost per unit will be
$0.20. in fixed cost depreciation on oven and depreciation of cooking equipment
taken @$13.33 with overhead rate of $0.13 and monthly overhead rate would be
@$0.01.
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Master Budget
Production for 1 month
Revenue Budget
Production Budget
Direct Material
Budget
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Direct Labour Budget
Manufacturing
Overhead
Budget
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Ending Inventory Budget
Cost of Sales
Budget
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Support Department Budget
Budgeted Statement of
Profit or Loss
a production
budget for Fondant
Cookie with an
estimated selling price of $4.00. it is estimated that 1500 cookies would be sold out.
The production budget states required unit of production of 2000 cookie subject to
particular year. Direct material budget presents a total material cost of $202.57. in
order to acquire the production objectives as total purchase cost of $810.30. the
inventory budget states a cost of ending inventory of 500 units @$1.87 of $935.00.
Cost of sales budget presents cost of sales as @$2603.19. It is forecasted that the
business would be able to gain a profit of @$2237.77.
Reflection
I was supposed to create a budget plan for the proposed business idea of
Fondant Cookies in Australian market. I think that cost structure of business among
different sections is one of the complex and critical task. I would have to go through
different cost structures in order to classify the direct cost, labour and overhead cost.
I prepared a cost sheet in order to determine the above discussed costs which was
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the initial requirement for me. As the overall results presents a favourable image of
business which is one of the confidence booster for my budgeting skills. It was quite
harder for me to collect the relevant aspects regarding a cookie brand. Throughout
the whole assignment work the knowledge and understanding of production process
easily able to correlate the objective of the assignment. The context provides a clear
understanding of budgeting and forecasting skills that will assist decision making in
near future too.
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References
Khamooshi, H. and Golafshani, H., 2014. EDM: Earned Duration Management, a
new approach to schedule performance management and
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1041.
de Waal, A. and Kourtit, K., 2013. Performance measurement and management in
practice: Advantages, disadvantages and reasons for use. International
Journal of Productivity and Performance Management. 62(5). pp.446-473.
Ogbo, A. I. and Ukpere, W. I., 2014. The impact of effective inventory control
management on organisational performance: A study of 7up bottling company
nile mile enugu, nigeria. Mediterranean Journal of Social Sciences. 5(10).
p.109.
Colin, J. and Vanhoucke, M., 2015. A comparison of the performance of various
project control methods using earned value management systems. Expert
Systems with Applications. 42(6). pp.3159-3175.
Bianchi, C., Cosenz, F. and Marinković, M., 2015. Designing dynamic performance
management systems to foster SME competitiveness according to a
sustainable development perspective: empirical evidences from a case-
study. International Journal of Business Performance Management 31. 16(1).
pp.84-108.
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