Domain of Health Supplements

Question: Discuss about the Report for Domain of Health Supplements. Answer: 1. Blackmores Limited is a public listed company based in Australia which is the market leader in the domain of health supplements which are wide in coverage and include various micronutrients (i.e. vitamins and minerals) besides other health supplements. The company does not limit to the marketing of these products but also manufactures the same. As a result, the company boasts of a product range which is greater than 500. Additionally, besides Australia neighbouring New Zealand, the company has sizable presence in a plethora of nations associated in South East Asia (Blackmores. 2016). There are three key profit drivers of the company. Firstly, the company if focusing on better leverage in terms of online platforms so as to achieve greater penetration and sales of the current product line. The growth engine for the company in the recent times and also in the near future would be the Asian markets and thus profits derived would be directly driven by the performance and penetration achieved in these markets. Besides, the company aims at constant innovation to offer new products in line with the dynamic customer needs and enhancing the overall operational efficiency to maximise profits (Blackmores. 2016). The company has posted impressive results in the recent times backed by growth in both topline and bottomline but there are certain risks that need to be managed. The company may face supply constraints with regards to the various natural ingredients it requires to manufacture the supplements. Besides, there may be issues with regards to product quality which may adversely impact sales and may also dent the brand image of the company. Further, the industry is subject to a host of regulatory guidelines in various geographies and as these get more stringent in the future, it may require higher costs to ensure the same at increased cost (Blackmores. 2016). 2. Yes, cost objects can be identified in the annual report. These include raw materials and consumables used, selling and marketing expenses, employee benefits expenses etc. (Bhimani et. al., 2008). One example of product cost associated with Blackmores Limited is raw materials and consumables used and in FY2016 it amounts to $ 214.263 million (Blackmores. 2016). Three period costs are selling and marketing expenses, repairs and maintenance expenses, professional and consulting expenses (Seal, Garrison Noreen, 2012). Selling and marketing expenses are period costs as these cost are incurred by the company irrespective of the fact whether sales happens or not. Repair and maintenance expenses are also period costs as these are ongoing expense whose level is not impacted by the level of product sales. Professional and consulting expenses are also period costs as these are ongoing expense whose level is independent of the level of product sales. (d) CVP analysis can be used in the given case as the various assumptions such as price of unit sales, variable cost and fixed cost are constant for the company. Hence, using the CVP analysis, the break even volume can be computed using the given information on revenue and costs from the income statements (Drury, 2008). (e) The company has dividend operations into segments based on underlying geography and product. The information about the same as in FY2016 is indicated below (Blackmores, 2016). Australia - $ 495.43 million China (in country) - $ 48.014 million Other Asia - $ 81.36 million BioCueticals - $ 69.17 million Others - $ 23.237 million (f) The budgetary system is in operation in the company which is apparent from the information provided in the annual report with regards to the budgeted figures in terms of revenue growth in segments and other parameters as shown below. (g) The key element driving budgetary system would be revenue growth and this in turn would facilitate performance analysis. The company would prepare sales budget, cash budget, purchase budget and master budget (Bhimani et. al., 2008). References Bhimani, A, Horngren, CT, Datar, SM Foster, G 2008, Management and Cost Accounting 4th eds., Prentice Hall/Financial Times, Harlow Blackmores 2016, Annual Report 2016, Blackmores Website, Available online from https://www.blackmores.com.au/about-us/investor-centre/annual-and-half-year-reports (Accessed on October 16, 2016) Drury, C 2008, Management and Cost Accounting, 7th eds., Thomson Learning, London Seal, WB, Garrison, RH Noreen, EW 2012, Management Accounting, 4th eds., McGraw -Hill Higher Education, Maidenhead