Project Report: Business Decision Making and Production Analysis

This report analyzes the production process of ABCD Limited, a manufacturing company producing footballs and basketballs. The study uses Excel tools to evaluate machine hours, labor costs, selling prices, and fixed costs to determine the optimal production levels for maximizing profitability. The methodology involves preparing an Excel report to assess the relationship between machine hours and output, considering factors like labor hours and selling prices. The findings indicate that producing 55,000 basketballs and 40,000 footballs would maximize resource utilization and profitability. The report recommends the company produce these quantities of each item to increase profitability, improve production, and effectively utilize resources. The report also suggests conducting market research to assess the demand for the products to avoid potential losses. The report includes financial statements showing profitability at different production levels and offers recommendations to improve overall business performance.

Running Head: Business Decision Making
1
Project Report: Business Decision Making

Business Decision Making
2
Contents
Introduction.......................................................................................................................3
Purpose of the report.....................................................................................................3
Description of problem.................................................................................................3
Methodology.....................................................................................................................3
Findings............................................................................................................................5
Recommendation or conclusion.......................................................................................5
References.........................................................................................................................7

Business Decision Making
3
Introduction:
In the report, various excel tools have been evaluated to manage the production
process of ABCD limited. In this report, various excel tools have been used to reach over a
conclusion about the total production units. It explains that how much production units must
be produced of Football and Basketball by the company.
Purpose of the report:
The main purpose of conducting this study and prepare the report is to evaluate the
production process of ABCD limited and make a recommendation to the company about total
production units. This report explains to the management of the company that how much
basketball and football must be manufactured by the company to improve the profitability
position and the overall return of the company. This decision has been made after evaluating
all the production aspect of the business.
Description of problem:
The case explains that the ABCD is a manufacturing company which produces the
sports equipment that includes football and basketball. On the basis of the given machine
hours, total production units of the business has been measured. As well as various other
production aspects such as labour hour, selling price etc has also been taken into concern for
this report.
Methodology:
To evaluate the company’s production units and the level where the profitability level
of the business would be at its best, a excel report has been prepared. In order to solve the
case, machine hours has been taken into context and it has been found that in the given
machine hours how much units could be produced by the company which could be sold and
offer huge return to the company (Brooks & Mukherjee, 2013). The calculations brief the
total labour hour to produce the unit of basketball and football is 0.5 and 0.3 hour.
The evaluation explains that in case of manufacturing the football and basketball,
machine hours would be 21000 which are quite lesser than the available machine hours. So,
the company could improve the production level of equipments. In case of utilizing all the
machine hours, company should manufacture 55000 units and 40000 units of basketball and

Business Decision Making
4
football (Goetsch & Davis, 2014). It would help the company to manage and improve the
production level of the business.
In addition, if the production units of the company would be improved than it will
lead to the higher sales and ultimately, the total profitability level of the business would also
be improved. The case explains that the fixed cost of production is connected to the total
machine hours. It further explains that in case of production of 55,000 basketballs, the
profitability level of ABCD limited would be $ 3,56,000. And in addition, the profitability
level from football would be $ 2,28,960 (Hilton & Platt, 2013).
Statement of profit
Basketball Football
Per unit 55000 units Per unit 40000 units
Selling price $ 14 $ 770,000 $ 11 $ 440,000
Less:
Material Cost $ 2 $ 110,000 $ 1 $ 50,000
Labour cost $ 3 $ 165,000 $ 2 $ 72,000
Gross Profit $ 9 $ 495,000 $ 8 $ 318,000
Tax Cost $ 138,600 $ 89,040
Net Profit $ 356,400 $ 228,960
Working Note:
Total Machine Hours 39000-40000 Hours
In case of 30000 units of basketball, total
machine hour would be 15000
Whereas, In case of 20000 units of football,
total machinery hour would be 6000
Though, 21000 will be the total machine hours and thus the rest machines would be idle. So, it
is suggested to the company to enhance the production level of basketball and football.
Further, in case of 55000 units of
basketball, total machinery hour would be 15000
Whereas, In case of 40000 units of football,
total machinery hour would be 12000

Business Decision Making
5
Thus, 39500 hours would the total machine hours. If the production of basketball and football
would be 55000 units and 40000 units. So, company is suggested to the company to manage
the Production of basketball and football to 55000 units and 40000 units (Zimmerman &
Yahya-Zadeh, 2011).
On the basis of the above tables, it has been estimated that the business should
produce the 55,000 and 40,000 units of basketball and football to improve the profitability
level, production level as well as the utilization of available resources of the business. The
calculations explain that the profitability level of the business would also be improved to the
$ 3,56,4000 and $ 5,28,960 in case of basketball and football.
Findings:
The above evaluation and the spreadsheet calculations of this case explain about the
below findings and these findings must be considering by the management while making
better decision about company’s position:
1. The business should take the concern of the fixed cost as well while making decision
about the total production units (Garrison et al, 2010).
2. The various items of cost sheet such as variable cost and contribution per units of cost
sheet assist the management and other parties to evaluate the exact units of
production.
3. In order to generate the total estimated profit of the business, it becomes important to
measure the sales unit of the business.
4. All the related factors of the business must be considered while making decision
about the production units of the business.
5. The spreadsheet calculations explain that the basketball and football production units
of the business must be 55000 and 40000 to utilize the available resources at their
maximum and improve the overall level of the business (Drury, 2013).
6. The overall calculations explain that the estimated units would offer the maximum
profits to the business.
Recommendation or conclusion:

Business Decision Making
6
On the basis of evaluation on ABCD limited and their production level, it has been
measured that the business should produce the 40000 and 55000 units of football and
basketball. These changes in the production level of the business would improve the level of
the profitability position and utilization of all the resources of the business. The main factor
in the production system of the business is total machine hours which mainly affect the
production process of the company. The evaluation brief that the company could produce the
40000 and 55000 units of football and basketball.
Further, it has been estimated that in case of production of 55,000 basketballs, the
profitability level of ABCD limited would be $ 3,56,000. And in addition, the profitability
level from football would be $ 2,28,960 in case of production of 40000 football units.
The management of the company is also suggested to conduct a market feasibility
study to evaluate the demand of the football and basketball in the market so that the
production could be done in that way. If the demand of the products is lower than it could
lead to the business towards the losses.

Business Decision Making
7
References:
Brooks, R., & Mukherjee, A. K. (2013). Financial management: core concepts. Pearson.
DRURY, C. M. (2013). Management and cost accounting. Springer.
Garrison, R. H., Noreen, E. W., Brewer, P. C., & McGowan, A. (2010). Managerial
accounting. Issues in Accounting Education, 25(4), 792-793.
Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence.
Upper Saddle River, NJ: pearson.
Hilton, R. W., & Platt, D. E. (2013). Managerial accounting: creating value in a dynamic
business environment. McGraw-Hill Education.
Zimmerman, J. L., & Yahya-Zadeh, M. (2011). Accounting for decision making and
control. Issues in Accounting Education, 26(1), 258-259.