Page 8 - CIMA MCS Workbook February 2019 - Day 2 Tasks

CIMA FEBRUARY 2019 – MANAGEMENT CASE STUDY

TASK 2 – STANDARD COSTING AND ABC

Trigger and Task

The Senior Financial Manager has emailed you:

To: Financial Manager

Date: Today

Subject: Costing

Hi,

I’m concerned that we don’t currently manage our costs very well, mainly because we haven’t
implemented any means of tracking many of the costs that we incur. Morrison doesn’t see an
issue here, as long as we are profitable, but I think that without a means of analysing and tracking
our costs we may be missing out on the ability to reduce them through efficiencies and better
procurement. Plus, if our market becomes more competitive or if we choose to expand into a
more competitive town or country, we will need to know how far we can reduce prices whilst
maintaining profitability.

I’d like you to put together some briefing notes that I can use as a basis for discussion with
Morrison about implementing new costing methods. Please cover the features of standard
costing and activity based costing.

There has been reluctance from the board to spend money on getting more detail on our costs
because of the perceived difficulties of implementation. Please cover in your notes the difficulties
that we could encounter in implementing either of these methods.

Regards,

Senior Financial Manager

Prepare the work the Senior Financial Manager has requested. (Time 45 minutes)

28 KAPLAN PUBLISHING