Ajinomoto (Malaysia) Berhad: Company analysis

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INDIVIDUAL ASSIGNMENT

SECTION: B2

COURSE: BBDUH

SUBJECT: ACCOUNTING FOR BUSINESS (ACC 2206)

REPORT TOPIC: AJINOMOTO (MALAYSIA) BERHAD

(AJI-NO-MOTO UMAMI SEASONING)

LECTURER: MS VARALETCHUMI A/P G.V. SUMATHRI

TABLE OF CONTENT

  1. INTRODUCTION………………………………………………………………1
  1. ROLE OF THE FINANCIAL CONTROL
    1. PLANNING……………………………………………………………..1
    2. DIRECTING AND MOTIVATING………………………………………………………….2
    3. CONTROLLING………………………………………………………..2
    4. DECISION MAKING………………………………………………………………...2
  1. PRINCIPAL ACTIVITIES………..……….…………………………………....3
  1. COST CLASSIFICATION
    1. DIRECT MATERIALS………………………………………………….3
    2. DIRECT LABOUR……………………………………………………....3
    3. MANUFACTURING OVERHEAD………………………………….….4
    4. NON-MANUFACTURING COST………………………...………..…...4

(Diagram Summarizing)…………………………….……………………5

  1. COST BEHAVIOUR
    1. VARIABLE COST………………………………...…………….………6
    2. FIXED COST……………………………………………….……………7
    3. STEP COST………………………………………………..………..…...8
    4. SEMI-VARIABLE COST……………………………………………….9
  1. PROCESS OF MAKING PRODUCT……………………………………………………………………..10
  1. CONCLUSION…………………………………………………………………11
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8.0 REFERENCES…………………………….……………………………………12

1.0 INTRODUCTION

Ajinomoto (Malaysia) Berhad is a Bursa Malaysia-Listed manufacturing company[1]. It is involved in manufacturing and selling of its products which are monosodium glutamate and other related products[2]. The company is primarily involved in Umami segment, for example, Monosodium Glutamate (MSG) and Food and seasoning segment like Industrial Seasonings and Tumix. Other products like industrial sweetener, feed-use amino acids and frozen food has sold too.

2.0 ROLE OF THE FINANCIAL CONTROLLER

2.1 PLANNING

Ajinomoto (Malaysia) Company has a comprehensive budgeting and forecasting system which approved by the Board and holding Company[3]. The company is plan to remain challenging, with increased competition and upward pressure on production costs in the business environment.

2.2 DIRECTING AND MOTIVATING

Ajinomoto (Malaysia) Berhad is maintaining a corporate culture which sum up what the company must do to raise the corporate value and minimise any risks that may happen in daily activities. It guides the internal conduct in the organisations and relationship between its customers, partners and shareholders. It is also expenses for employee benefits[4].

2.3 CONTROLLING

Ajinomoto (Malaysia) Berhad save cost by using cheaper price of raw material, lower depreciation charge resulting from plant and machinery useful life as well as lower production cost. In-store promotions and sales campaigns can lead to consumer awareness and higher sales. Meantime, the company has engaged in corporate social Responsibility such as charitable programs[5].

2.4 DECISION MAKING

The Board in the Ajinomoto (Malaysia) Berhad is the view that the current composition of the Board facilitates effective and independent decision making and judgement. The company provide the sound advice and judgement for the benefit of the company and its shareholders.

3.0 PRINCIPAL ACTIVITIES

The principal activities of Ajinomoto (Malaysia) Berhad are manufacturing and selling the monosodium glutamate and other related products[6]. One of the product in the company is AJI-NO-MOTO Umami seasoning.

4.0 COST CLASSIFICATION

4.1 DIRECT MATERIALS

The two direct materials in AJI-NO-MOTO Umami seasoning are sugar cane or cassava and fermentative microorganism[7]. Sugar cane or cassava which convert into glucose are used to make AJI-NO-MOTO Umami seasoning through fermentation with glutamic acid producing microbe. Besides, the fermentative microorganism is used to react with the glucose and release glutamic acid.

4.2 DIRECT LABOURS

The two direct labours in AJI-NO-MOTO Umami seasoning are the production workers and quality control workers[8]. The production workers are controlling the machine production in the factory when producing AJI-NO-MOTO Umami seasoning while the quality control workers make sure that everything in AJI-NO-MOTO Umami seasoning from raw materials to finished products meets the quality and safety. All the production process are require elements of quality of control by quality control inspectors.

4.3 MANUFACTURING OVERHEADS

The manufacturing overhead for AJI-NO-MOTO Umami seasoning are utility costs in factory and manufacturing technician for cleaning. A factory needs common utilities like water and electricity to work a factory[9]. Besides, the manufacturing technicians for cleaning have perform various cleaning and preparation tasks in the factory.

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4.4 NON-MANUFACTURING COSTS

Non-manufacturing cost is divided into selling costs and administrative costs. One of the non- manufacturing (selling costs) is advertising cost. The company has promote its AJI-NO-MOTO Umami seasoning through television along with other related marketing initiative. Another non- manufacturing cost (administrative costs) is general and administrative expenses likes accounting staff’s benefits[10]. Accounting staffs do the accounting stuff for AJI-NO-MOTO Umami seasoning. It is possible to give benefits.

Diagram Summarizing

5.0 COST BEHAVIOUR

5.1 VARIABLE COST

In total variable cost, the total AJI-NO-MOTO Umami seasoning cost is based on how many sugar cane or cassava is used. The total AJI-NO-MOTO Umami seasoning cost increases as the number of sugar cane or cassava are increased. When the number of sugar cane or cassava increase, the cost of the sugar cane or cassava will increase too and this will lead to increase in total cost of the product[11].

Total AJI-NO-MOTO Umami seasoning cost

Number of sugar cane or cassava

In variable cost per unit, the cost of sugar cane or cassava remain constant as its price. It will remain the same although the total activity is changing. The number production of AJI-NO-MOTO Umami seasoning will remain the same and it will not affect the cost per material. Therefore, the cost per sugar cane or cassava is unchanged.

Cost per sugar cane or cassava

Number of AJI-NO-MOTO Umami seasoning

5.2 FIXED COST

In total fixed cost, the depreciation of equipment in the factory is fixed as the percentage of depreciation is constant[12]. The depreciation does not change based on the number of AJI-NO-MOTO Umami seasoning that the company produced. The depreciation remain constant because the depreciation and the number of production do not affect each other.

Depreciation of equipment in the factory

Number of AJI-NO-MOTO Umami seasoning make in a year

In fixed cost per unit, the depreciation of equipment will decrease when the activities decrease. Within the depreciation of equipment, the average fixed cost per AJI-NO-MOTO Umami seasoning decreases as more products are made.

Depreciation of equipment (factory)

Number of AJI-NO-MOTO Umami seasoning make in a year

5.3 STEP COST

One of the cost in step cost is buy production machinery which produce AJI-NO-MOTO Umami seasoning. Each machine can produce a specific amount of products. If the production increase more amount than the specific amount, then a second machine must be buy.

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Cost (Production Machinery)

Number of unit (Bottles or pack)

Another example for step cost is quality assurance workers in the production department. Ajinomoto Group’s had its own quality assurance system[13]. Each workers is able to review specific number of parts per day. Once the production process of AJI-NO-MOTO Umami seasoning exceeds the volume level, another quality assurance worker need to be hired. When the workers can no longer handle the work load, another workers will be hired.

Cost (Number of quality assurance workers)

Volume level of production (AJI-NO-MOTO Umami seasoning)

5.4 SEMI-VARIABLE COST

Semi-variable cost is contain variable cost and fixed cost and variable cost, for example, utilities cost in the factory[14]. The company need to pay the utilities charge every month which is fixed charge. However, the utilities cost will increase when the production of AJI-NO-MOTO Umami seasoning is increased. Therefore, the company need to pay for the two charges.

Total utilities cost (Monthly)

Activity

Another example is labour cost in factory. The workers in factory who produce the AJI-NO-MOTO Umami seasoning receive wages for their regular hours which is fixed. Anyhow, there will be an overtime pay for them if they exceed their regular hours by producing the products. At here (variable cost), the greater level of production increase the total cost.

Total labour cost

Activity

6.0 PROCESS OF MAKING PRODUCT

AJI-NO-MOTO Umami seasoning is usually made out from sugar cane or cassava. Firstly, sugar cane or cassava will be harvested from plantation. Then, the sugar cane or cassava will convert into glucose through a machine. After this, fermentation process will take place which the glucose put into a fermentation tank or broth. Fermentative microorganism is added into the tank or broth. At here, the fermentative microorganism will take glucose as food and then release glutamic acid. When the fermentation is completed, the glutamic acid will turn into Monosodium Glutamate (MSG) solution through neutralization. Next, the MSG solution will undergo a few purification steps likes decolourization and filtration to produce pure MSG solution. The solution will be crystallised by a vibrator to produce white MSG crystal which will then remove from the solution via separation. The MSG crystal will then dry using a hot air and a separated according to the require sizes. Lastly, the MSG is packed and named AJI-NO-MOTO Umami seasoning[15].

7.0 CONCLUSION

Ajinomoto (Malaysia) Berhad is a well-known Monosodium Glutamate (MSG) company in the world. It is a successful company as it manage its company nicely especially in financial and management. Role of financial controller and principal activities are identified and understand. One of the product has been choose to be describe about cost classification, cost behaviour and the process of production which is AJI-NO-MOTO Umami seasoning.

(1198 words)

8.0 REFERENCES

Website References

Ajinomoto (2014) AJI-NO-MOTO. [Online]. Available from: http://www.ajinomoto.com.my/retail-products/aji-no-moto/. [Accessed 23rd October 2014].

Ajinomoto (2014) Production Process. [Online]. Available from: http://www.ajinomoto.com/features/amino/lets/product/. [Accessed 23rd October 2014].

Ajinomoto (2014) Quality Assurance System of the Ajinomoto Group. [Online]. Available from: http://www.ajinomoto.com/en/activity/quality/reliable2.html. [Accessed 23rd October 2014].

Report References

Ajinomoto (2014) Annual Report 2014. Ajinomoto (Malaysia) Berhad, Malaysia.

Ajinomoto (2014) Financial Report 2014. Ajinomoto (Malaysia) Berhad, Malaysia.

Online Newspaper References

Fujimura, N. (2011) MSG Maker Ajinomoto Seeks to Expand in Emerging Markets to Drive Growth. [Online]. Available from: http://www.bloomberg.com/news/2011-02-25/msg-maker-ajinomoto-seeks-to-expand-in-emerging-markets-to-drive-growth.html. [Accessed 23rd October 2014].

Fujimura, N., Ozasa, S. (2011) MSG Maker Ajinomoto May Raise Japan Prices as Raw-Material Costs Increase. [Online]. Available from: http://www.bloomberg.com/news/2011-01-12/msg-maker-ajinomoto-may-raise-japan-prices-as-raw-material-costs-increase.html. [Accessed 23rd October 2014].

Book References

Obayashi, Y. (2012). Food Safety and Quality Assurance of Food Products. Quality Assurance & External Scientific Affairs Dept., Ajinomoto Corporation.


[1] Bursa Malaysia (2014) List Of Companies. [Online]. Available from: http://www.bursamalaysia.com/market/listed-companies/list-of-companies/main-market. [Accessed 17th October 2014].

[2] Ajinomoto (2014) AJI-NO-MOTO. [Online]. Available from: http://www.ajinomoto.com.my/retail-products/aji-no-moto/. [Accessed 23rd October 2014].

[3] Ajinomoto (2014) Annual Report 2014. Ajinomoto (Malaysia) Berhad, Malaysia.

[4] Ajinomoto (2014) Annual Report 2014. Ajinomoto (Malaysia) Berhad, Malaysia.

[5] Ajinomoto (2014) Annual Report 2014. Ajinomoto (Malaysia) Berhad, Malaysia.

[6] Ajinomoto (2014) Annual Report 2014. Ajinomoto (Malaysia) Berhad, Malaysia.

[7] Ajinomoto (2014) Production Process. [Online]. Available from: http://www.ajinomoto.com/features/amino/lets/product/. [Accessed 23rd October 2014].

[8] Obayashi, Y. (2012). Food Safety and Quality Assurance of Food Products. Quality Assurance & External Scientific Affairs Dept., Ajinomoto Corporation.

[9] Ajinomoto (2014) Financial Report 2014. Ajinomoto (Malaysia) Berhad, Malaysia.

[10] Fujimura, N. (2011) MSG Maker Ajinomoto Seeks to Expand in Emerging Markets to Drive Growth. [Online]. Available from: http://www.bloomberg.com/news/2011-02-25/msg-maker-ajinomoto-seeks-to-expand-in-emerging-markets-to-drive-growth.html. [Accessed 23rd October 2014].

[11] Fujimura, N., Ozasa, S. (2011) MSG Maker Ajinomoto May Raise Japan Prices as Raw-Material Costs Increase. [Online]. Available from: http://www.bloomberg.com/news/2011-01-12/msg-maker-ajinomoto-may-raise-japan-prices-as-raw-material-costs-increase.html. [Accessed 23rd October 2014].

[12] Ajinomoto (2014) Annual Report 2014. Ajinomoto (Malaysia) Berhad, Malaysia.

[13] Ajinomoto (2014) Quality Assurance System of the Ajinomoto Group. [Online]. Available from: http://www.ajinomoto.com/en/activity/quality/reliable2.html. [Accessed 23rd October 2014].

[14] Ajinomoto (2014) Financial Report 2014. Ajinomoto (Malaysia) Berhad, Malaysia.

[15] Ajinomoto (2014) Production Process. [Online]. Available from: http://www.ajinomoto.com/features/amino/lets/product/. [Accessed 23rd October 2014].