Saving Model for Rob's Classic Car - Management Accounting

This presentation discusses the development of a spreadsheet model for minimizing the direct and indirect cost incurred on the vehicle restoration for Rob's Classic Car, a specialized showroom for the sale of Ford Cortinas and Ford Escorts. The model includes cost estimation, quotation for client, and more opportunities for the organization to earn more revenue. The impacts of the model include analyzing the overhead cost incurred on direct labor and indirect productive work, and the difference between the estimated job cost and actual job cost associated with the restoration of the car vehicle. The presentation also covers the model building process, including the identification, documentation, data, workings, and input/output pages. The raw data used and assumptions are also provided, along with the limitations of the model.

MONEY SAVING
MODEL FOR ROB’S
CLASSIC CAR
Management Accounting

Rationale
•The Rob’s classic car is the specialized
showroom for the sale of Ford Cortinas and
Ford Escorts.;
•Is to minimise the direct and indirect cost
incurred on Vehicle Restoration.

Benefits from the model
•To develop a spread sheet model for minimising
the direct and indirect cost incurred on the vehicle
restoration;
•Cost estimation
•Quotation for client;
•More opportunities for the organization to earn
more revenue;

Impacts
•Helps in analysing the overhead cost incurred
on direct labour and indirect productive
work.
•Difference between the estimated job cost
and actual job cost associated with the
restoration of the car vehicle.

Model Building
•Consist of following pages
•Identification
•Documentation
•Data
•Workings
•Input/ Output

Identification Page

Documentation Page

Raw Data Used and assumptions
Direct Material Standard price /
Unit Indirect
Overhead Cost Annual cost
Frames $2,000.00 Manager’s
salaries $75,000.00
Resurface flywheel $40.00 Workshop lease $2,000.00
clutch disk $35.00 Electricity $2,000.00
Pressure plate $40.00 Water $3,000.00
Throwout bearing $25.00 Plant depriciation $500.00
Standard transmission $400.00 Cleaning
products $2,000.00
Transmission rebuild kit $95.00 Waste Disposal $1,500.00
Ford Escorts
[units]
Ford Cortinas
[Units]
Ford Escorts
[units]
Ford Cortinas
[Units]
Total Service [number of
cars] 32 35 28 38
Direct Material Total Cost
Frames 24 23 24 25 $55,000.00
Resurface flywheel 25 27 25 25 $41,000.00
clutch disk 22 25 23 26 $32,000.00
Pressure plate 18 18 21 25 $19,600.00
Throwout bearing 16 26 25 28 $11,200.00
Standard transmission 16 15 20 20 $14,500.00
Transmission rebuild kit 27 25 18 26 $1,12,000.00
Direct labour
Standard
Rate/Hour Ford Escorts Ford Cortinas Total Cost
Actual
Labour Hours
Undercarriage, cast
steel $85.00 12 10 $2,500.00 18
Blasting and Dipping $85.00 24 35 $6,000.00 52
Lubrication $85.00 30 28 $6,250.00 60
Rattle cans of primer
and paint $85.00 15 16 $4,250.00 38
Master and wheel
cylinder kits $85.00 15 10 $2,400.00 25
Rebuilt fuel pump $85.00 12 15 $3,000.00 33
New gas lines $85.00 15 13 $2,665.00 20

Workings [Variance]
Direct Material Standard price /
Unit Total Cost Actual Quantity
Purchased Actual Price Qty Used Price Variance
Frames $2,000.00 $55,000.00 49 $1,122.45 49 43000
Resurface flywheel $40.00 $41,000.00 50 $820.00 50 -39000
clutch disk $35.00 $32,000.00 49 $653.06 49 -30653.06122
Pressure plate $40.00 $19,600.00 46 $426.09 46 -19304.34783
Throwout bearing $25.00 $11,200.00 53 $211.32 53 -8566.037736
Standard transmission $400.00 $14,500.00 40 $362.50 40 -16125
Transmission rebuild kit $95.00 $1,12,000.00 44 $2,545.45 44 -125272.7273 -195921.1741
Direct labour
Standard
Rate/Hour Total Cost
Actual Labour
Hours
Actual rate per
hour
Labour
hour Used Price Variance
Undercarriage, cast steel $85.00 $2,500.00 18 $138.89 18 -970
Blasting and Dipping $85.00 $6,000.00 52 $115.38 52 -1580
Lubrication $85.00 $6,250.00 60 $104.17 60 -1150
Rattle cans of primer and
paint $85.00 $4,250.00 38 $111.84 38 -1020
Master and wheel
cylinder kits $85.00 $2,400.00 25 $96.00 25 -275
Rebuilt fuel pump $85.00 $3,000.00 33 $90.91 33 -195
New gas lines $85.00 $2,665.00 20 $133.25 20 -965 -6155

Input Output

Limitation
•This is a simplest form of store renovation
model;
•Only standard components were considered
while building this model;
•Data were assumed whenever required and it
was a mix of research data and manipulated
data