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Arnio Welding Company Analysis

Updated December 29, 2021
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Arnio Welding Company Analysis essay

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Locally operated and owned for about 25 years in Central Village, CT, Arnio Welding LLC Welding and Fabrication is a small manufacturing company known for their welding specialists and custom fabrication creations. This business was started 25 years ago in a garage, and now by operating a 15,000-square foot factory, many can tell customer satisfaction is their top priority. Arnio Welding LLC proudly serves commercial and industrial facilities in Connecticut, Massachusetts, and Rhode Island, and locals make them their full service stop for unique metal fabrications, metal repairs, welding needs, and structural steel.

Local companies can count on the highest values of quality and reliability when they call Arnio Welding, LLC. Ranging from small assignments to heavy industrial equipment, this manufacturing business is not only one locals can trust but is a fully insured and united company. The company’s mission and goals have and always will be to guarantee high quality work, competitive and authentic pricing, and provide 25 years of experience in metal working into their custom products. Arnio Welding, LLC welcomes local industries to visit their Central Village, CT location to ask any questions regarding the services and products that they offer or can offer.

Arnio Welding, LLC, is a certified business committed to supplying its many customers with custom fabrication results at competitive costs. From design to engineering for all commercial, residential, and industrial fabrication projects, the goal is to have their professionals produce advanced quality work at low prices. The company encompasses a highly-trained staff of 12 employees, not including the owner and office administrator, that can produce a variety of products from a single element to a finished assembly, while managing complete production runs, setup, planning, management, and continued machinery usage.

Their extensive sheet metals skills and experience benefits its customers in that they can efficiently produce products in a timely manner, while also enjoying abundant savings because the company has an internal tool room to avoid outsourcing. In addition, Arnio Welding, LLC works with a variety of metals and materials from ornamental to industrial, comprising of stainless steel, carbon steel, sheet metal, galvanized metals, structural shapes, angle iron, and aluminum.

Arnio Welding, LLC manufactures and produces advanced fabrication products custom to the customers’ needs including heavyweight plate and steel fabrication, mechanical equipment and its components, cyclones and dust assembly components, piping and conveyors, heat recovery and exhaust systems, and other ornamental workings. More specific products that are manufactured include hoppers to aid companies in their production process, turbine towers, spiral staircases, and residential railings.

Arnio Welding, LLC has a primary market that consists of many commercial and industrial facilities, whose specific names were asked to not be stated, that make up the percentage of their market share and are where this company receives its main revenue from. The production process of each custom fabrication project that is taken on by Arnio Welding, LLC and assigned to its staff is produced on a case by case basis, meaning each customization manufactured has a unique procedure that is specific to that job. For instance, this small manufacturing company could receive an order by an industrial facility to create a turbine tower because they want the product to be fabricated or customized to their specific measurements or liking.

Therefore, to build the turbine tower procedures of bending, cutting, and assembling the metal parts would occur, and as metal fabrication is a value-added process, it involves the creation of heavy machinery, structures, and parts from a variety of raw or direct materials in the production process. The costs components, including direct materials, direct labor, and manufacturing overhead, are important factors of a manufacturing business. For example, at Arino Welding, LLC the direct materials to create the finished, fabricated products include steel, metal, aluminum, iron, and the associated parts, like nuts and bolts.

The company had stated they spend an estimated $321,833 on direct or raw materials per year. As for the direct labor costs, which consists of the cost of the line or staff employees working directly on the fabrication project, was an estimated $640,285 per year. The manufacturing overhead costs include rent for the manufacturing building, which was an estimated $60,000 per year, the depreciation on the factory equipment, the two managers in the factory, the factory maintenance employees, electricity and gas for the company, gas for the trucks to transport materials and finished products, and lastly indirect factory supplies. The manufacturing overhead cost that this company pays, with all factors direct and indirect included, was estimated to be $617,190 per year that they spend.

The cost structure that is used by Arnio Welding, LLC is a mix of both variable and fixed amounts. For instance, the labor of the employees is a fixed amount where they get paid the same amount of money each week, and the cost of direct materials is a variable cost because the cost of materials is constantly changing, like the price of steel fluctuates depending on the time of year where it is higher in demand or how much the company needs. Lastly, the accounting software used by Arnio Welding, LLC is QuickBooks for manufacturing, where they track their inventory in work in process and where it is located, track costs of a specific job, schedule production for a job to meet customer deadlines, and track the progress of each job.

As for Arnio Welding, LLC’s strategic planning, they are both a cost leader and quality leader. For instance, they have two suppliers that they purchase their steel material from and when they need steel for a specific project they will send an order out, then receive two bids or amounts they are asking the company to pay for regarding that amount of steel. Depending on the type of project, they will either take the higher cost bid or amount to pay because the want the customer to have a higher quality product to meet their needs, or they may purchase the steel for the lower cost because quality is not as important of a factor to the customer, and they rather pay less.

Arnio Welding, LLC uses a job order costing system, which involves a specified accumulation of production costs that pertain to a specific fabrication project. As an example, if the company was manufacturing a customized metal staircase for a commercial business, then the job is accounted for using the job order costing system by recording the costs of the amount of labor the staircase required to produce the product, and any other associated parts or materials used in the production of the staircase would be charged to the cost of the job. Then, the costs of the labor and materials used to produce the product would be billed to the customer.

Next, Arnio Welding, LLC uses an actual costing input system because each product manufactured by the company is a custom-made project. Therefore, when the costs of the products used in manufacturing this specific project are recorded it includes the actual cost of each material in production, the actual amount of labor or time workers spent on producing the product, and the actual overhead costs incurred, not incorporating any normal or standard costing. Furthermore, at Arnio Welding, LLC the types of cost drivers used to allocate overhead include the number of customers, number of orders issued, amount of direct labor hours worked by the staff, and the amount of machine hours used, then incorporating ABC or multiple cost driver costing to allocate the amount or specific costs incurred in total to create the manufactured product.

A budgeting system and its procedures are important to the success of many manufacturing businesses, including Arnio Welding, LLC. This company budgets its financials on a year by year basis, meaning they analyze their revenue based on the last 5 years and compare it to what they expected, then evaluate the differences and decide what changes they need to make to increase their profits. The type of budget used in the business is a flexible budget because material prices, like steel and metal for example, are always changing depending on demand and the time of year.

In addition, the types of budgets prepared by Arnio Welding, LLC is operating budgets and capital budgets, where the operating budget is a forecast of all expected income and expenses based on the predicted sales revenue for the year, including sales, inventory purchased for the factory, manufacturing costs, and selling expenses, whereas capital budgets include when the company invests in expensive machinery or tools to aid in the production of the fabrications. As for internal control procedures, Arnio Welding, LLC every month analyzes and evaluates what expenses they had incurred during the month, compares its expenditures to their income, performs double-entry accounting balances, and completes periodic reconciliations to see if the balances in their accounting system match up with the balances in their bank accounts.

Arnio Welding, LLC is involved in controlling procedures regarding performance measures that include making sure the product not only is manufactured with high quality but is also sold at competitive prices, ensuring efficiency and productivity in a timely manner to meet customer deadlines, cost reduction to increase profitability, and provide complete customer satisfaction to have the customer want to do business with them again. The role of management accounting is important in the success of Arnio Welding, LLC where two people, the owner and the office administrator, not only review all records to plan strategically, but they act in maintaining their strong internal controls, monitoring their budgets and account balances, and most importantly keeping the loyal employees that have been with them since the business started 25 years ago and continuing to hire the most productive employees.

Two of these four loyal employees are staff managers in the factory, including a safety manager and a production manager. The types of information needed by the safety manager would be to know all the safety measures of the machines, how to prevent any unsafe working conditions or accidents, and making sure all staff on the floor is wearing glasses, ear protection, gloves, and any other safety equipment needed to ensure safety, as well as training other employees on safety measures. As for the production manager, they must need to know how each machine works, make sure other employees are producing the right amount of material or creating the right piece for a project, and the in and out flows of production.

The pricing strategies used by Arino Welding, LLC includes target costing or having a target price, meaning the company first finds out the price of materials and how much the specific job will cost, then adds their base percentage to the cost to increase the price to their desired selling price. The company does this to increase profit and figure out how much they should be spending on material costs. Lastly, the inventory management system used by Arnio Welding, LLC is the pull system or demand based system. This manufacturing company does not produce products first, they first wait until the customer has demanded a specific fabrication order, so they will only make enough materials to aid in the production of the custom project. With this pull system strategy, this means that no inventory will be left over or wasted, and if it is, they recycle the left-over materials to be used in the production of another project, and this also reduces inventory holding costs.

Arnio Welding Company Analysis essay

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Arnio Welding Company Analysis. (2021, Dec 29). Retrieved from https://samploon.com/arnio-welding-company-analysis/

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