Advanced Cost Analysis and System at Apple - Assignment Example

Advanced Cost Analysis and Systems Apple Inc Apple inc. is a US Based company dealing in design and sales of computer software to the worldwide consumers. The company started as a store dealing in development and sales of personal computers in 1976. 22 years after, the Fortune Magazine reported Apple as the most valued company by the consumers in the United States. The company operates 408 retail stores across fourteen countries with an estimated $446 billion of market capitalization. Further, the total number of employees, both permanent and temporary is 73,100. The following is a Advanced Cost Analysis and Systems indicating how the company process occur. The Advanced Cost Analysis and Systems involves carrying out Business cycles for Apple Inc, which include Revenue--sales process, sales return, cash receipt Expenditure--purchasing, purchase return, cash disbursement Payroll Fixed Assets--Acquisition, dispose Inventory--production Treasury Cycle Finiancial. 1. The company’s Payroll cycle The payroll cycle begins by the receipt of time cards from the hourly employees. The time cards depict the number of hours worked by the employees in their respective departments. The head of the department either signs the time card for confirmation or does not sign to indicate rejection. The head of department then submits the time card to the payroll manager who then updates the payroll. The company’s CFO then reviews gives approval leading to the processing and posting of the payroll. Once the CFO authorizes the paychecks, the company then prepares adequate cash for disposal, in covering the amount indicated in the payroll. This triggers the preparation of a payroll voucher to act as a record for the total amount indicated in the payroll. After posting the payroll, the checks are then delivered to the employees. This transaction affects the cash department consequently triggering for the preparation of a disbursement journal. The company then reconciles the ledger information. 2. The company’s Revenue Cycle Sales process As depicted in the flow chart showing sales process, the first step is a customer placing an order for the company’s products. The company presents the customer with the details of products before the actual transaction starts. As a legal procedure, customer purchase order forms an inherent part of the transactions and must include company name, customer’s name, fabric, quantities, shipping and billing information. The receipt of the purchase order drives the company to approving the order and accompanied credit carried by the customer for the transaction. in the shipping process, the company makes use of a common carrier after sending a sales invoice to the customer. The sales invoice usually contains the order number, sales price and the request for payment. The company then registers the payment made by the customer on the sales journal to form part of the company’s financial statement. Sales return process The receiving department oversees the receipt of the returned goods. After the receipt, the receiving department must always carry out inspection to detect any possible damage. The company usually keeps a copy of invoice initially sent to the customer, containing information about the sales. This helps in confirming whether the returned goods agree with sales record. Accepting the return goods trigger the company to approves the return of the products by through giving out a Return Authorization number. Further, the quality control department may also issue a credit memo to confirm the acceptance of the goods, after which the department makes deduction from the payment. Cash collection process The cash collection process begins by issuing of a remittance advice which approves the account number for which the customer makes the payments. The receipt of the payments is usually recorded in the receipts journal. The approval of the cash triggers the company to providing a confirmation to the customers besides updating the account receivable with the transaction. Through the treasurer, the company receives bank statement which is used in reconciling the receivable. The company then sends an updated statement of account to the customer, usually after a week. 3. The company’s Expenditure cycle Purchasing process At Apple Inc, the purchasing process begins when there is an urge for making a purchase. The urge for purchase usually arises when there is need to introduce an invention in the market. The newly invented products often need new fabric selection consequently making the company to make a purchase these materials from other firms. Through the account system, the company prepares a purchase requisition form containing the information about the specific items required. From the purchase requisition, the company prepares a purchase order which is then sent to the seller. The receipt of the items, calls for the company to update account payable records and inventory records followed by updating the general ledger. Purchase return process The company normally rejects the purchased materials in the event of discrepancies exhibited in quantity or quality. The company prepares a debit memo to depict the information about the materials supposed to be returned to the seller. Once the debit memo is availed, the prepares for the shipment of goods through recording the quantity and other relevant details. Once receiving the returned materials, the seller provides refund leading to adjustment on the account payable. The adjustment is also necessary for the inventory records and general ledger, because the transaction affects them. Cash disbursement process The need for establishing a written record for cash disbursement makes it difficult for use of currency to make payments. The company makes use of checks, usually recorded in the account payable. The manager approves for an adequate cash for the company’s operation, after checking the cash balances. The company then seeks for a representative who signs a check used in paying for the transactions. Bank statement is received by the company to confirm the cash payment made. Since this process affects the company’s cash, the treasurer updates the general ledger to reflect the information contained in bank statement. 4. The company’s fixed assets cycle The company establishes fixed asset acquisitions when it identifies a need for new asset, such as office equipment. The company approves for purchase of the new asset through the purchasing department. The department selects a suitable vendor to supply the needed asset, followed by preparing a purchase order. Usually the company updates their capital budget to depict the newly introduced plan for acquisition. The receiving departments carries out an inspection on the fixed assets approved for purchasing. The company reconciles a subsidiary ledger to depict the list of fixed assets acquired. The department responsible for fixed asset accounting oversees preparation of depreciation schedule to reflect associate amounts and timing. The successful completion of acquisition makes the company to update the general ledger. Fixed assets disposal process The detection of damage or inefficiency associated with the acquired fixed assets triggers the company to carry out a disposal through selling or discarding. Usually, the company records the process as revenue since it triggers asset outflow in the operations. Then the disposal department records the date of disposal besides removing it from the list of fixed assets found in the subsidiary ledger. Since the process affects cash flow of the company, the department records gains or losses arising from the process. Finally, the company reconciles the general ledger. 5. The Company’s Inventory cycle As shown in the excel flowchart, the process constitutes the production of electronic products from the company’s resources. The company has established a system to help in keeping records of all the transformation activities during the production process. The record guides the management to oversee the development and selling process, which represents major activities of the company in the industry. The actual start of the process is when the company initiates a conduction process in the course of its operation. After initiating the operations, the company prepares a sales order followed by recording production schedule meant for the process in operation list. In the course of production, the company assigns workers to various activities relevant to the production process. Further, the payroll department also involves in preparing worksheets constituting time worked by the employees during the operation period. Completion of the production process, usually indicated by finished goods, triggers the action of quality control department in inspecting for the quality of computers and phones therein. After the inspection, the company either stores the product in warehouse or end up in shipping. The whole process results to preparation of inventory records, to depict the quantity of good resulting from the production process. Further, the cycle also subjects the company to reconciling the general ledger to indicate the realized adjustments. Conclusion Apple inc. is a US Based company dealing in design and sales of computer software to the worldwide consumers. The company started as a store dealing in development and sales of personal computers in 1976. 22 years after, the Fortune Magazine reported Apple as the most valued company by the consumers in the United States. The company operates 408 retail stores across fourteen countries with a an estimated $446 billion of market capitalization. Further, the total number of employees, both permanent and temporary is 73,100. Read More