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Managerial Accounting
Project Progress Report
Ottoman Pharma
Submitted by:
Abdullah Irshad
Bushra Nayab
Mehak Mumtaz
Nuzrat-ul-ain
Sumbal Khan
MBA 2K18 (A)
OTTOMAN PHARMA
Company Introduction
Ottoman Pharma is a veterinary bio-medical pharmaceutical company that specializes in
producing anti-viral vaccines designed specifically for poultry for protection against various viral
diseases such as Avian Influenza, Newcastle Disease and Hydropericardium Syndrome. Ottoman
Pharma was established in 2002 as a small scale medicine manufacturer but has grown
considerably in size in terms of both customers and revenue over the years.
The company and it’s products are licensed by the Drug Regulatory Authority of Pakistan
(DRAP) and the current product line consists of 13 products with the main products being
1. OTTO FLUPLUS VAC
2. OTTO NDFLU VAC
3. OTTO H9 VAC
4. OTTO HPS VAC.
Manufacturing Process
The manufacturing process includes three sub-processes;
1. The Drug production process, where the anti-virus medication is produced
This is the main production process where the medication is produced. The main raw materials
for this process are eggs. Since a virus cannot grow without a host cell, these eggs act as
the ideal medium for growth of the different virus strains. Relevant virus strains are
introduced within the eggs and are allowed to grow for 4 to 5 days. Next, the virus strain
is extracted and inoculated to induce immunity.
The company ensures good quality eggs are chosen at this that are free from any defects and
are not already infected with any virus or other diseases. This is particularly important
as an egg that is infected could potentially destroy the whole batch of medication and
could prove to be deadly for the animals.
The other raw material is montanide oil which is imported from France on a need basis.
After the inoculation process the montanide is added to the medication. This oil increases the
impact level of the medication to ensure maximum effectiveness. Without this oil the
impact of would be 3/10 on the animal and this oil increase the impact to a 7/10 level.
2. The Testing process, which includes the testing of the product to ensure its quality and
effectiveness of impact.
The second sub process is the testing phase of the drug. This process can take up to 14 days
with the company conducting various tests to ensure quality of the drug. These tests
occur in house however samples of the products are sent to third parties regularly to
ensure un-biasness and also in compliance to rules of the regulatory authority.
3. The Packaging process, where the product is packaged into individual vials and made
ready for distribution to various clienteles.
The third sub process is the packaging process. After successful testing of the product it is
packaged into different vials. The company also produces these vials in-house to ensure
quality. The drug is secured into the vials using rubber stoppers and subsequently
sealed. Labels and bar codes are added to each individual vial in accordance with the
batch and production dates after which they are secured with shrink wraps and sent to
the finished products store.
For Ottoman Pharma, we propose a job order costing model. This is because even though the
product nature is quite similar the products are produced in batches and job order costing
would be and ideal model for costing. In this model we will need to carefully differentiate
between the different manufacturing costs of direct materials, direct labor and the
manufacturing overheads.
Direct Materials
Eggs
Virus Strains
The direct materials will include the eggs for propagation and incubation of the virus and also
the oil used to increase the impact, the plastic vials, rubber stopper, seals and shrink wraps
used in packaging the product.
Direct Labor
Drug Production
Packaging
The direct labor will include the 25 individuals involved in production, testing and packaging
process and their wages.
Manufacturing Overheads
Indirect
Gloves, Candles
Materials
The manufacturing overheads will include all other costs most of which are not paid that much
attention to like indirect materials including candles, gloves, syringes etc. Apart from that all
indirect labor will be classified into overheads; these include the 10 individuals not involved in
production including, cleaning and waste management staff, worker boys, drivers etc. Other
costs include the utilities, depreciation, petrol for generators etc.
Benefits
This project has the potential to benefit both the company and us as students.