Value Chain Analysis and Cost Estimation for Natural Pulp Ltd and Austal Ships

Management accounting
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Part 1
Trading Account of Natural Pulp Ltd as on 30 June 2014
Particulars Amount ($) Particulars Amount ($)
Opening Stock Sales Revenue 420000
Work In Progress 35000 Closing Stock
Finished Goods 55000 Work In Progress 67667
Direct Material Used 80000 Finished Goods 106333
Direct Labour Cost 160000
Manufacturing Overhead 96000
Gross Profit 168000
594000 594000
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Cost of WIP = 67667
Cost of Finished Goods = 106333
Working Notes
1. Manufacturing overhead is 40% of manufacturing cost and manufacturing cost includes
direct material used and labour cost.
Part 2
1. The value chain is a central which helps in identifying the areas of cost savings. By adding
value in the different process the cost can be saved. The value chain is made by every
company to increase the efficiency. The overall goal of the value chain analysis is to give
maximum value for the least possible cost (Gereffi, et. al., 2010). Value chain analysis breaks
down the flow of production into five categories. The reason behind the break down is to
increase the efficiency in production by creating a competitive advantage. There are five
primary activities which are essential in adding value.
2. Value chain estimates cost by using the internal cost analysis which is as follows:
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