Question

Q 6. Mr. Amir, Ms. Aya are working in “Amina Furniture Manufacturing LLC” which is located at Seeb, Oman. Mr. Amir is responsible human resource manager, Ms. Aya look after materials procurement and issue to production as material manger. You are working as Senior Cost Accountant in same furniture manufacturing LLC. You three have strong opinion that “Success of business is purely depending on the competitive selling price which business offer to their customer”. In short, while deciding selling price, cost accounting plays an important role. You being responsible cost accountant you have to justify in details above opinion with the understanding of role of cost accounting for “Amina Furniture Manufacturing LLC.” as furniture manufacturing business.

Answer 1

its true that the in the time of competition, no firm can survive without knowing its cositng of the product and providing the product as per its utility. Being as a cost accountant following are the benefits of costing to Amina Furniture Manufacturing LLC.

1) product differentiations.:- There is segment of the different customers as per their buying capacity. Higher rate of proudcts provide higher quality with higher cost yet lower rate of products have lower quality but lower rates. there are all type of customers in the market. with knowing the costing of the proudcts, need of all type of customers can be fulfilled and profit can be maximized.

2) full utilisation of the resources:-using of the costing it can be ensure that the utilisation of the resources reached maximum so that the per peice of the cost get to minimum. It is done through the knowing of the process and finding the cost per process and revising it, doing the reverse costing, reverse engineering, removing unnecessary processing step, cost benefits analysis and other costing techniques.

3)controlling of the wastage:- wastage is the part of the product which is residual but take a significant cost of material and procesing. In costing it is said that which cannot be measured or write down cannot be controlled. costing helps to write down all the relevant expenses of the Amina furniture manufacturing llc to write down related to materila labour power, consumables, indirect expenses.so that they can be justified for their use.

4) Taking managerail decisions: costing helps in budgeting to control the expenses and peep into the future. It helps the managers to controll the unnecessary expenses as per the industry norms or standard provided by any statutory committee.

5) competitive ness:= all together costing give the competitive edge to the firm by reducing the cost, giving the correct mangerial decisions. It helps to maximize the profit by its tools of budgeting, standard costing, MIS, Wastage constrolling, cost benefit analysis, marginal costing method and other tools.

The role of costing is now very vital in the modern time of competitivness and due to the limited resources of production.

The cost accountant can define all these contributions to the Amina Furniture Manufacturing LLC.