Question

The purpose of this project is to help illustrate the manufacturing process and the costs involved. You will need to locate an example of a manufacturing process –hint try sites such as Google or YouTube. The product you select is completely your choice!   

Required

         Answer the below questions regarding the manufacturing process for the product you selected. Format your paper according to the question you are answering. Your responses should be in complete sentences and be free of spelling or grammatical errors. Spelling, grammar, and formatting errors reduce the grade by one point each.

1. Describe in at least two single paces the product which is being produced and the company which makes it.
   
2. Describe the production process that is used in making this product.
   
3. Define raw materials. What raw materials are used to make this product?
   
4. Define direct materials. What direct materials are used to make this product?
   
5. Define indirect materials. What indirect materials are used to make this product?
   
6. Define direct labor. Describe the jobs of workers who would be considered “direct labor” in making this product.
   
7. Define indirect labor. Describe the jobs of the workers who would be considered “indirect labor” in making this product.
   
8. Define manufacturing overhead. In addition to the indirect materials and indirect labor previously described, what other manufacturing overhead expenses would be incurred in this production process? Be specific and thorough. Make reasonable “guesses” if not known for certain using examples provided in class or the textbook.
   
9. Would a job-order costing system or process-costing accounting system be used for this production process? Define and describe each costing system. Give specific reasons for the choice of which costing system would be most appropriate for this manufacturer.
   
10. Site your sources –include the link of the site you used in obtaining your information.

Answer 1

Solution

LIFEBUOY – SOAP

Lifebuoy is a famous and distinctive brand of soap that was created by the Lever Brothers soap factory in 1894. It was the first soap to use carbolic acid, which gave it a red colour and strong medical scent. Lifebuoy is still manufactured today and is the leading brand of soap in many developing countries. Lever brothers and the Lifebuoy brand provided an affordable product that promoted personal health and hygiene. Now lifebuoy is producing Hindustan Uniliver Limited (HUL). HUL was established in1933 as Lever Brothers and in 1956, it is known as Hindustan Lever Limited.

PRODUCTION PROCESS

The kettle method of making soap is still used today by small soap manufacturing companies. This process takes from four to eleven days to complete, and the quality of each batch is inconsistent due to the variety of oils used.

The kettle process Boiling

Fats and alkali are melted in a kettle, which is a steel tank that can stand three storeys high and hold several thousands ponds of material. Steam coil within the kettle heat the batch and bring it to a boil. After boiling, the mass thickens as the fat reacts with the alkali, producing soap and glycerin. Salting: The soap and glycerin must now be separated. The glycerin is extracted from the bottom of the kettle. To remove the small amount of fat that have not saponified, a strong caustic solution is added to the kettle. The mass is brought to a boil again, and the last of the fat turns to soap. It may proceeds to the next step.

Pitching

The soap in the kettle is boiled again with added water. The mass eventually separate into two layers. The top layer is called Neat Soap, which is about 70 % soap and 30 % water. The neat soap is taken off the top. The soap is then cooled. The soap may be poured into molds and allowed to harden into a large slab. It may also be cooled in a special freezer. The slab is cut into smaller pieces of bar size, which are then stamped and wrapped.

Raw materials used

A raw material is an unprocessed material or primary commodity, is a basic material that is used to produce goods, finished products, energy, or intermediate materials that are feedstock for future finished products.

Raw materials used in lifebuoy soap – Fat and Alkali

Direct Materials

Direct materials are the resources used to make a product. These resources must be clearly linked to the product being produced

Direct Materials used in soap production   - Oil and Glycerin

Indirect material

Indirect materials are materials that company uses in the production process. However, it cannot link them to a specific job or product

Indirect materials used in soap production – Sodium hydroxide/ Potassium hydroxide

Direct Labor

Direct labor is production or service labor that is assigned to a specific product, cost center, or work order.

Fats and alkali are melted in a kettle, which is a steel tank that can stand three storeys high and hold several thousands ponds of material. After boiling, the mass thickens as the fat reacts with the alkali, producing soap and glycerin. Salting: The soap and glycerin must now be separated. The glycerin is extracted from the bottom of the kettle. To remove the small amount of fat that have not saponified, a strong caustic solution is added to the kettle. The soap in the kettle is boiled again with added water.

Indirect Labor

Indirect labor is the cost of any labor that supports the production process, but which is not directly involved in the active conversion of materials into finished products.

Packing is the critical element in the physical distribution of the products, with influence the efficiency of the logistics system.

Manufacturing overhead

Manufacturing overhead is all indirect cost incurred during the production process. This overhead is applied to the units produced within a period. It include Depreciation on equipment used in the production process.

Job order Costing

Job order costing is the costing method which is used to determine the cost of manufacturing each product.

Process costing

Process costing is an accounting methodology that trace and accumulates direct costs, and allocates indirect costs of manufacturing process.

Process costing is most better than job order costing in Soap production.