1. Price Control System (PCS) was one of the most significant management accounting strategy of Higashimaru Shoyu Company managed by Toshio Okuno, the prominent modernizer.
2. The PCS was applied to the organizational process in 1980. The main target of the method was considered as a revenue unit of each organizational group. Furthermore, each group had to buy resources received during the manufacturing process from the previous group, and, then, sell these goods to the following group. Nevertheless, each unit of the enterprise had to receive little incomes every month. For instance, group responsible for koji preparation had to buy the needed resources from headquarters, and, after manufacturing, had to sell their final product to the next unit, maromi management process. Moreover, the main goal of this accounting method was to set all the groups, where their leaders functioned as CEO of small organizations, aiming to earn profits. Okuno determined the prices between the groups. Koji preparation, shipping, bottling, filtration and pasteurization, moromi management, and fermentation were six major units of the organization, which were responsible for integral manufacturing phases. Each group’s output had to be increased by 5%, which made the transfer price. If all the steps of manufacturing earned 0,5% of the profit, the total profit was 3%. Apart from this, all the units of this enterprise were not forecasted to increase projected profits, although the successful running of their businesses according to the established policies would generate effective profits for the enterprise. Besides, the row material saved for more than 3 years had to be considered according to the same viewpoint. If the budget profit margins and prices for raw materials were kept constant, the groups could see the clear effect of the policies. The monthly profits of the groups were calculated by subtracting the total purchases and monthly expenses defined by the annual budget of the group basing on the incomes of the unit per month. The inputs’ volume used multiplied by transfer prices of the PCS defined the input purchases. Transfer prices multiplied by the unit’s sells of manufactured products determined the monthly expenses.
Calculate the cost of essay
3. The Price Control System policy applied to the running of the business can be obviously called strategic, and there are many reasons to substantiate this claim. First, as each strategy, this method has its own projected plan of manufactured production, sold goods, and even projected profits, which they will bring to the company. However, their activities were not connected with the total forecasted or even actual profits of the firm. For example, if each of the group had to increase its output by 0.5% to influence the price for transferring, the overall revenue of the company will be 3%. Second, all the future prices and salaries were thoroughly projected using accurate ratios of manufactured goods, their quality, and volume of the manufacturing. For instance, if a product had a low quality, the group had to pay penalty for it in accordance with the established rule. Nevertheless, if the group overdoes the daily manufacturing plan, it would be encouraged by the management using the same proportions vice versa. Third, the PCS had a few control groups, which were responsible for high level of manufacturing processes and working conditions for the workers. Its own system of control is an important part of all the strategy planes. For instance, the processes of packaging and bottling were controlled by inspection group. Moreover, there were established very exact rules regarding all the parts of this business machine. For example, it was stated that each support group was able to achieve high profits for the organization. Finally, each of strategic practices has its own results either positive or negative, and these results influence a firm in the whole, or, sometimes, only in some of its departments. Apart from this, Higashimaru Shoyu Company experienced positive influence of implementation of the PCS into the manufacturing processes, because their profits increased and became more stable than they were before. Furthermore, each group had to compete with others to get bonuses, to avoid penalties, work harder, and show better results, creating different methods of increasing their profitability.
4. First, price control system is a method, which considers each organizational group as an independent unit that has to bring revenues for the company according to the established standards. Obviously, this strategy had a high quality of realization at the firm, because it has brought its fruits for the commonwealth of the enterprise. The strategy’s main target is the prosperity of the firm, development, and establishment of minimal profits that will be constant too. Moreover, all the departments of the company successfully used this practice for their improvements. Besides, this company’s strategy is aimed at the consumers as well as at the enterprise, because all the controlling systems significantly influenced the manufacturing. For example, there are now goods of higher quality than they were before, which causes greater satisfaction of the customers’ needs and desires, This is because thorough and accurate system of bonuses and penalties were provided. Moreover, the competitive effect, which appeared between different departments after the launch of special prize for superior performance for two best groups, also increased the quality of the production and the profits of the enterprise. The most important fact is that employees began to pay more attention to the customers’ needs and to the quality of manufacturing goods. In addition to this, the company’s strategy has affected other industries by its successful reduction of the costs by 7%, which happened in the first year of its application. For instance, prominent companies from various industries such as electronic, dairy products, and even beer manufacturers studied and visited the system. Moreover, the beer firm provided its own PCS in all its organizational units. As a result, the implementation of PCS had a great impact on the customers of the company, its employees, external market, and some even not related industries. The quality and variety of services enormously expended, which attracted more new consumers and contributed to an increase in the firm’s profits and to the successful adoption of similar practices at other enterprises.
5. To begin with, Price Control System practice is a very complicated phenomenon for Higashimaru Shoyu Company. Furthermore, the processes of developing, launching, and improving contain a plethora of different steps. First, it was needed to establish concrete prices for products’ manufacturing and selling for all the groups working at the company. Moreover, the special ratios between budget profit margin and prices for raw materials should be established accurately in order to clearly show the employees the efficiency of their work according to the practice. Furthermore, special extra payments and fees for activities measured below the standard should be provided, and they also have to be equal and depend only on the direct deviation from the stated norm. Additionally, the regulatory groups should also be gathered and applied to control the processes of application of the PCS by, for example, machinery maintenance and inspection. Each of them would be responsible only for its particular tasks; for instance, machinery department will be responsible for maintenance of equipment. Nevertheless, the percentages of charges possible for these support groups will allow them to be profitable for the company in their turn. Finally, each month groups’ leaders have to write summaries about their departments’ activities and achievements defining steps taken and measuring the achieved success level. To calculate the monthly profit of a group, its leader has to subtract the total month’s purchases and expenses, which were defined using annual budget of the group, from the revenue for exact month. On the other hand, transfer prices of inputs multiplied by the consumed inputs’ volume helped the leaders in defining their input purchases. As a result, revenues per month were determined by the price of transfer multiplied by the number of products sold to the following group. The final step of the PCS is that the group, which has the two groups with the highest performance’s rates, should be given money prizes for their hard work. Finally, it is crucial to establish small awards that will show the importance of recognition but not money for each group of the firm.
6. To start with, PCS has significantly impacted ethics of the firm and contributed to its overall improvement and successful development. First, the responsibility of everyone was assumed, because they started manufacturing goods of higher quality. Second, support teams controlled the quality of execution of different tasks with the help of various departments, which, in its turn, increased responsibilities of all the workers and motivated them to work diligently to succeed. Third, the employees were allowed to charge for their work as much as it was needed. For example, if the maintaining support group had to work in urgent situation, it was allowed to charge 50% for their work. However, if the repairs had been planned before, the laborers were able to charge only 20% for the job done. What is more, all the employees became interested in the reduction of the charges for supporting the groups, which contributed to the increase in the firm’s profits. For instance, wastewater group’s charges were reduced, when unit responsible for koji preparation gathered rubbish and brushed the floors, because the wastewater did not have enough work to take charges for it. Besides, all the employees generated a vast array of ideas regarding safety improvements, which helped with the reduction of the injuries. For instance, the workers of bottling group considered all the past accidents and developed some successful steps, which helped to eliminate injuries in the near future. Fortunately, new managers were hired in the fairest way, which could be allowed in those times. For example, all the applicants had to suggest their plans of improvement of manufacturing processes, which would significantly help the organization. Moreover, all the customers became more loyal to the company, because they understood that the company would supply them with goods of high quality. In its turn, these changes caused the improvement of interpersonal communication, when leaders became concerned about their teams’ members and employees became more responsible and respectful. Finally, the society was completely satisfied with new practices applied by the firm’s management, and a great number of representatives of other firms visited, absorbed, and applied this unique experience at their enterprises.
What customers say about our service
