Products Costing System

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Contents

Executive Summary…………………………………………………………………….. Page 2

Introduction………………………………………………………………………..…… Page 3

Analysis Part A – Conceptual Issues…………………………………………………… Page 4

Analysis Part B – The Practical Application to Sunflower Ltd……………………..….. Page 5

Reflective Learning………………………………………………………….................. Page 6

Conclusion …………………………………………………………………………..…. Page 7

References ……………………………………………………………………………... Page 8

Appendix……………………………………………………………………………..… Page 9

Executive Summary
Dear Mr & Mrs Izsmart,

We acknowledge that Sunflower Ltd is a large public company, reputable for its diverse range of flowers and large customer base. At present, we have identified that there is no formal product costing system implemented in the company – with the exception of the calculation of product costs imperative for external financial reporting purposes, prepared by your company’s accountant. In order to reduce cost pressures upon Sunflower Ltd, in the highly competitive flower sector, this report recommends the introduction of management accounting into the company, in particular the use of product costing systems. The purpose of this report is to identify an appropriate product costing system that will enable Sunflower Ltd to reach optimal efficiency as well as to justify each costing system that may be applicable to your company. We will additional outline the potential benefits that your company may gain as a result from adopting an suitable product costing system.

After much research and deliberation, we, as consultants, recommend the implementation of the hybrid costing system, operation costing as being most suitable for a large growing entity such as Sunflower Ltd. However, we acknowledge that due to some service aspects in the firm, activity based costing may be used as an alternative, but we will leave that decision to you.

Yours sincerely,

Introduction
Every organisation wishes to manage resources more effective



References: Langfield-Smith, K., Thorne, H., & Hilton, R. W. (2009). Management accounting: An Australian perspective (5th ed.). Sydney, NSW: McGraw Hill. Appendix

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