ADMS 3510 Group Assignment:
Markworth Products (MP)
Fall 2014, Section A

Group members
Alamgir Khandwala, 212357109
Mohammed Islam 212540191
Sobia Ali, 210515062
Summaiya Haque, 211992948

Date of submission: 9th November 2014

To: Mr. John Adam, President
From: Controller
Subject: Cost System and Capital Budgeting Improvement

Please find attached report for Markworth Products for recommendation regarding appropriate costing system as it grows as an organization and capital budget evaluation.

Kind Regards,
Controller
Introduction and Relevant Facts
Markworth Products (MP) is a new Canadian public company in the plastic packaging products industry. It develops technologically advanced machinery and moulds that give MP a competitive advantage over its competitors. John Adam has requested us to develop efficient costing system and improve capital budgeting process.
Problems
Major Problems:
- MP does not have an efficient costing system in place to allocate the direct manufacturing costs and indirect manufacturing overhead costs for accurate prediction of product costs.
- The current approach for capital budgeting to evaluate new equipment does not meet the current industrial standards of accepted NPV practices
Minor Problems:
- Holding inventory for clients free of charge
- Potential market loss due to emphasis on reducing costs and value leadership
- Above average profits due to competitive advantage last temporarily as competitors imitate the technology
Qualitative Analysis
Industry Analysis:
The plastic products industry is competitive and technology is becoming an increasingly competitive factor to improve product processes and performance. The industry is being pressurized to reduce the use of plastics and use higher-performance polymer materials in its applications to comply with standards of