Business Accounting and Financial Studies - Management Accounting Group Assignment Help

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Business Accounting and Financial Studies - Management Accounting Group Assignment

Task: Task 1 (product costing): Off-grid solutions SE (short: OS) is a company that plans and implements off-grid RE-systems mostly for customers in developing countries. OS is specialized in Solar Home Systems (SHS) that provide electricity for lighting of rooms, cooling food and medicine, cooking or charging mobiles.The business model OS is using is quite simple. They are able to provide all services for developing, contracting and sales, EPC and O&M. Normally they try to integrate local subcontractors for procurement, logistics, construction, monitoring and maintenance.This reflects the company’s vision of building sustainable off-grid systems. At the moment OS is preparing a tender for a SHS-solution for Vietnam. The potential customer is planning to equip a number of lodges in a National Park with SHS to make the location a bit more attractive for tourists. The first step for preparing the tender is to calculate the costs for a SHS for one lodge (OS chooses a system configuration that was used for comparable settings). The total number of lodges is planned to be 12. A first brief internal analysis led to the following data (for one lodge): • Direct material costs for the rooftop rack components are €100. • Direct labor costs for installation on-site (no electrical work): 8 h needed with an average hourly rate of €2/h • Direct material costs for the pv-module: €950 M03 Accounting Fall Semester 2018/19 2 • Direct material costs for the converter package, batteries and cables: €720 • Direct labor costs for electrical installation on-site: 4 h needed with an average hourly rate of €4/h • OS uses an overhead rate of 15% on direct material costs for the quality management tasks on the construction site. • Supervising the workforce on the construction site leads to a second overhead cost item. The allocation rate for overhead costs for this is 120% using direct labor costs as allocation base. Based on this data you should be able to perform the following subtasks: a) Please calculate the costs that OS SE should budget for one SHS in their tender. b) How does the number of lodges influence your cost estimations? Consider the distinction between fixed and variable overhead costs in your answer!    Please analyze a scenario with 18 instead of 12 lodges. Task 2 (further analysis): The OS management asks your consulting team also to prepare a presentation that should provide solutions for the following two subtasks: a) The OS management wants your team to develop a concept for detailed cost estimation for the SHS-project (structure only, without presenting the numbers). OS wants to use your concept also as a template for future similar SHS-projects. The concept should cover the whole range of services that OS is able to provide (developing, contracting and sales, EPC and O&M). You are asked to provide a compilation of the standard cost types for the service activities –hardware costs should be treated like in task 1. You should be able to explain how standard work packages and cost types are connected b) The OS management also wants to know how they could assign the company’s overall overhead costs to their projects.

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