Your team has been invited by the management of Almarai to present an overview of the issues facing the company. You are required to write a report to the management of ALMARAI, addressing the issues shown below. The report should be no more than 6 pages (excluding the title page, cover page, reference list, and appendices). A. The management of ALMARAI are concerned about the relevance of its current costing and billing systems: 1. Write an executive summary to highlight the main themes indicated in ALMARAI case. (10% of the project marks) 2. Describe the main features of the current costing and billing systems used by ALMARAI? Your answer should include the weaknesses of the current costing system. (10% of the project marks)
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B. The management of ALMARAI notes that cost accuracy is crucial for product pricing and customer retainment. You have been asked to address the following issues in your report: 1. Use the information in the case, including Exhibit 1 and 2 and any other necessary data on activities and costs to propose a more relevant costing system for ALMARAI. Use the costing system you have proposed to allocate ALMARAI’s overhead costs. (25% of the project marks) 2. Explain the differences in the assumptions between ALMARAI’s current costing system and the costing system you have recommended in (B.1) above. (10% of the project marks) 3. Use the costing system information calculated in (B.1) above to estimate customer profitability for LuLu, Carrefour, Almira and convenient stores. (15% of the project marks) 4. Compare the costs and profit per customer you have calculated using your recommended costing system (B.3) and the estimated costs using ALMARAI’s current costing system: a. What causes the two costing systems to provide different cost estimates? (10% of the project marks) C. Which costing system provides management of ALMARAI with better information? Why? Drawing on your answers on (B) above: a. What are the strategic implications of your analysis? Your answer should include your recommendations to the management regarding the company’s costing systems and pricing policy AND any tactical and strategic approaches that they should adopt in order to enhance the company performance, retain customers and remain competitive. (20% of the project marks)
Sample Solution
