Corporate Sentry, Inc.
Ref: Consideration of the Best Manufacturing Option
This letter is written as a response to address the issues raised in the communique you sent to us (the Audit Team). It is with great pleasure that I communicate back to you. Much of the possible feedback given is highly appreciated and we always look forward to offer our clients high-level satisfaction with our services.
In address to your concerns, the consideration of the best manufacturing option is fundamental to sustain your firm’s productivity and competitiveness. In reviewing your letter, I noticed that you want to increase your competitiveness by increasing your margins through cutting of costs. The proposed different options are analyzed as explained below.
Engineered costs comprise of the costs associated with the output such as purchase of raw materials, labor, and utilities (Xu et al., 2012). Discretionary costs comprise of the costs incurred in an unnecessary manner. The discretionary costs can be eliminated to minimize the production expenses and help cutting down the total cum required in the production process (Sujit & Kumar, 2016). In this case, the application of discretionary costs aligns with the utilization of the offshore production approach. This is designed to minimize the production costs at the lowest possible point. In turn, this is bound to facilitate the company to mitigate the production costs and regulate the cost of the products to meet the company objectives. Furthermore, a consideration of custom and excise duties on products both onshore and offshore is essential to making the best business decision. Also, an evaluation of the relations of the primary and producing country is essential to ensure the flow of goods from one country to another. Therefore, as an audit consultant firm, we would offer extensive analysis of all the three options, illustrate the impact of different regulations and economic environment as it impacts on the company’s performance. Consequently, the best option is one that is critical to meeting the company’s objective of increasing margins and cutting production costs.
Kajjumba, G. W., Nagitta, O. P., Osra, F. A., & Mkansi, M. (2020). Offshoring-Outsourcing and Onshoring Tradeoffs: The Impact of Coronavirus on Global Supply Chain. In Outsourcing and Offshoring. IntechOpen.
Sujit, K. S., & Kumar, B. R. (2016). Impact of Discretionary Expenditures on Profitability during Recession: Evidence from Manufacturing Sector in India. Theoretical Economics Letters, 6(03), 376.
Xu, Y., Elgh, F., Erkoyuncu, J. A., Bankole, O., Goh, Y., Cheung, W. M., … & Roy, R. (2012). Cost Engineering for manufacturing: Current and future research. International Journal of Computer Integrated Manufacturing, 25(4-5), 300-314.