Management Accounting

"Task 1 : Devising appropriate costing method "a ) Standard costing method would be the most appropriate costing method for the company " to apply given its daily cost accumulation . As provided by the case scenario , Hay " umbrellas Limited has already been applying standard costing in recording costs as " incurred in relation to the sales generated . I suggest that the company stick to using " standard costing system , and not shift to other types of costing systems . Such other " types would not fit the operations of the company . For example , an actual costing system " would "assign actual costs to all units produced . It involves

the complicated tracing of " individual supplier 's invoices for each input used in the production of each unit of " finished good to come up with actual cost figures that may still not be accurate (Costing Methods for Decision-Making Modern Management Accounting Practices " Thus , standard costing is the better method to apply "b ) Even if the company implements the inclusion in its production of the varieties in design , - " to-make models and new distribution channels , it still should stick to using the standard " costing method . It is a matter of improving the setting of standard costs to be as near as " possible to the actual costs thus , the variances should be neglibigle and should not affect " the decisions previously made using the standard costs set as basis . Looking at the actual " costs of production at a later time , management should see that the standard costs assigned " earlier to the various stages or procedures of the production are , after all , almost equal to " the real and actual costs incurred that can only be available as a total figure for an entire " operation site or segment "c . Target costing can definitely support the execution of the strategies to be implemented due to its " mechanisms which include "assuring that products are better matched to the customers ' needs " and aligning the costs of features with customers ' willingness to pay for them (H .M .B . Bird " R .E . Albano W .P . Townsend Target Costing : Delighting Your Customers While Making " A Profit ) Target costing includes the function of "generating the desired profitability at the " anticipated selling price in the future (ibid ) This function , then , can possibly improve the " company 's sales . As mentioned in the case "the company may not meet the sales target this " year . Using target costing might just be the change to bring about the needed improvement " in the company 's sales " Meanwhile , activity-based costing can support the execution of the same strategies by "assigning manufacturing overhead costs to products in a more logical manner than the " traditional approach of simply allocating costs on the basis of machine hours . Activity- " based costing first assigns costs to the activities that are the real cause of the overhead " It then assigns the cost of those activities only to the products that are actually demanding " the activities (Introduction to Activity Based Costing AccountingCoach .com ) Given the " varieties and -to-make models that will be manufactured as well , activity...