Cost for Product Quality of Manufacturing Firm- myassignmenthelp.com

Question: Discuss about theCost Accounting for Product Quality of Manufacturing Firm. Answer: Relationship Between Cost Control and Source of Supply The sourcing of material supplies is an essential process in an organization. The process of sourcing of material involves identification the suppliers and logistic service provider. The supplier will be from whom the goods are to be purchased while the logistic service provider will be responsible to bring the goods from the suppliers premises to the premises of purchaser (Madhavi, Mathew, Sasidharan, 2013). The entire process of material supply is crucial from the view point of cost control because cost of material supplies forms a significant part of the total cost of production. The management needs to be strategic in controlling the cost of material supplies. In the context of material supplies the cost control implies employing means and mechanism to reduce and control the cost of material purchased (Madhavi, Mathew, Sasidharan, 2013). The cost of material comprises the purchase cost and other expenses incurred in bring the material to the factory premises, which may include expenses such as freight, loading, unloading, and insurance. As part of the cost control process, the management sets budgets for the purchase quantities, prices and other expenses (Madhavi, Mathew, Sasidharan, 2013). The objectives of management are to ensure that the cost of material does not exceed the budget amount. In order to achieve this objective, the controlling and supervision of sources of material is necessary. The management needs to find out the sources of material where it can access qualitative material at low cost. Further, it should be noted that it is not the cost of material only which requires consideration of controlling but the quality of material is also important. The loose controlling on sources of supply may result in purchase of inferior quality of material. The inferior quality of material would further increase th e cost of production in the form of increased wastage (Madhavi, Mathew, Sasidharan, 2013). Impact of Source of Supply on Product Quality The sources of supply involve material suppliers and logistic managers. The sources of supply indirectly affect the quality of final product. The suppliers are responsible to make material as per specifications given by the purchaser. In case the suppliers provide defective material, the quality of the final product would be affected. The inferior quality of material would result in defect in production (Boon-itt, 2011). Thus, it is necessary to source the supplier of material carefully after reviewing the quality of material and negotiating the purchase price. Further, it is also necessary to take into consideration the controlling measures taken by the supplier to ensure good quality of the material. The other players in supply chain such as material packers and transporters also have impact on the product quality. In certain cases loose packaging of the material may affect its quality which in turn will affect the quality of final product. Further, the transporters are responsible to deliver the material in good condition to the purchasers premises. The laps in the transportation may deteriorate the quality of material. Therefore, it could be observed that all the participant of supply chain have importance for product quality (Benjaoran, Kaewsikhoa, Tabyang, 2012). Execution of Cost Control without any Significant Impact on the Product Quality In order to achieve the business objectives it is essential to have stringent cost controls in place. The purpose of having cost controls is to reduce the expenses so that profitability of the business can be improved (Wilson, 2015). Thus, the primary focus of cost control is on the cost cutting. However, it is notable that too much cost cutting may result in compromise in the product quality. Thus, it is essential to execute the cost controls in such a way that the impact on the product quality is minimal. If the cost controlling results in compromise with the quality of product, it will not benefit the company. In that way the company might save the cost but the revenues will be affected adversely. Due to low quality of product, the demand in the market will be down (Wilson, 2015). Thus, the essence is that the company should have cost controls but the execution of such controls should be in such a way that is does not compromise with the quality of the product. The cost cutting targets should be set in a realistic way; these should be achievable. The unachievable targets set by the management would result in compromising with the quality of the product (Wilson, 2015). Conclusion The discussion in this paper has been carried out on the aspects of cost control and the sources of supply. Further, the impact of sources of supply on the product quality has also been assessed. From the discussion, it could be articulated that the sources of supply have significant impact on the cost control. Further, it has been articulated that sources of supply also have great impact on the quality of the final product. However, the management needs to understand that the cost controls should be executed in such a manner that it does not affect the quality of the products adversely. References Benjaoran, V. Kaewsikhoa, A., Tabyang, W. 2012. A Development of Practical Cost Control System for Small and Medium-sized Contractors. IACSIT International Journal of Engineering and Technology, 4(3), pp. 243-247. Boon-itt, S. 2011. Achieving Product Quality Performance: The Roles of Supply Chain Integration and Information Technology. International Journal of Innovation Management and Technology, 2(5), pp. 373-376. Madhavi, T.P., Mathew, S.V., Sasidharan, R. 2013. Material Management in Construction A Case Study. International Journal of Research in Engineering and Technology, 2319-1163, pp. 400-403. Wilson, R. 2015. Mastering Project Time Management, Cost Control, and Quality Management: Proven Methods for Controlling the Three Elements that Define Project Deliverables. FT Press.