B8AF100: Jolly Fish Company Ltd Case Study - Accounting and Finance Assignment Help

Assignment Task:

Assignment Brief: 

The Jolly Fish Company Ltd (JFC) is a large, multinational fish company.  It started a new division in a rural area outside a major city at the start of 2018. This was very good news for the area, as at the time, a number of other unrelated factories had closed in the area and unemployment was above the national average. The plant employs 2,000 people and it has a shift pattern to allow it to operate from 6.00 am until 11.30 pm Monday to Saturday. It chose this location as it is close to a port. At the time there was some opposition to a large factory set up in a rural environment, but the promise of so many new jobs meant that the local feeling was mostly positive to the factory.
JFC has a board meeting in one week. You are required to prepare a report to the board on the two current issues being considered by the board of the plant.

Issue 1.
In its new plant, the Jolly Fish Company Ltd (JFC) manufactures specialty fish pies, which it sells in bulk to delicatessen shops. The only variable cost is raw material, which consists mainly of three types of raw fish as well as other lower value ingredients. The standard cost of the raw fish used in the manufacture of each 100 kgs of specialty fish pie is as follows:  
 

In preparing its budget for 2018, JFC assumed that there would be a market in its home country for 125,000 kilograms of fish pie and that JFC’s product would have a 40% share of its market. The budget also assumed a selling price of €6 per kilogram for JFC’s product. 
However, during 2018, JFC and its competitors were adversely affected by diminishing consumer confidence in fish products after a rumor about high levels of mercury making seafood unsafe. The actual total market size was only 110,000 kilograms of fish pie and JFC sold only 33,000 kilograms of its product. 
JFC’s managing director recently explained how his company attempted to respond to the difficulties it faced in 2018: ‘First, we reduced our selling price from €6 to €5.90 per kg; this was a modest price reduction in comparison with those of our smaller competitors. Second, we took advantage of falling market prices for some of the types of fish we use as a raw material for our product. With the benefit of hindsight, we should perhaps have done more to increase consumers’ confidence in the safety of fish products in general and our own product in particular.’ 

Issue 2.(B8AF100)
Many of the 2,000 employees of the plant live within 20KM of the plant, in the towns surrounding the plant. The staff relations committee has asked the board of the company if the company could provide a bus service from the surrounding towns to the plant during the working day. Prepare a report to the board explaining how you would use standard costing to plan and control the activities of the proposed bus service.

The report must focus on the cost control aspects of the service rather than the logistics of providing a rural bus service. Aspects that must be considered are:

• Why use standard costs to control the costs of the bus service
• The process of standard-setting
• The type of standards to be set and what each type of standard might be used for
• The preparation of a standard cost specification sheet
• Comparing the standard to the actual results
• Calculating and analyzing the variances
• Reporting to measure the effectiveness
• Implementing control measures and the feedback loop

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