Finacial & legal aspecat of procurement Assignment

Finacial & legal aspecat of procurement - Assignment Example nstruction of structures, fixing of electronics and navigation devices, maintenance of auxiliary systems, technical support to engineers and other shipyard services depend on the available specialized labor. Structural developments take the biggest chunk of labor expense followed outfit and furnishings because they are done virtually on a daily basis. Another cost driver is the purchase of materials (Moelmann & Harris, pg30). Fixing of electrical appliances cost the company heavily due to the high cost of purchasing special devices such as adaptors, which are very critical in navigation and propulsion. Materials increase overhead costs due to the ever-changing prices of imported appliances and accessories. The accounting office can hardly obtain a definite estimate of the overhead costs to be incurred on product accessories and appliance in all accounting phase. Most of the purchased materials are imported from Japan and Germany. The fluctuating world prices shift the costs from time to time making it quite impossible to project the actual cost of materials. Propulsion materials have a high depreciation rate due to the busy schedule of the transport company in all the segments in deals in. In shipping and land courier services, the expense is high on oil and engine spare parts. The cost of petrol, gearbox replacements is high and almost a fixed cost because it is the only available method of propulsion. For shipping high capacity, diesel engines are expensive to repair and the oil prices keep rising regardless of the increase in the cost of different engine models. In the last financial period, the company had to purchase more spare parts for the ship engines and 20 more courier vans to serve on the land segment. The overall cost of the company doubled even when the cost of technical support, auxiliary systems, and electrical appliances remained the same. This significantly affected the profit margin going down at its lowest in a decade. Fees and insurance has