You are a Costing Manager in Jackfew & Co, a company which manufactures and sells water
bottles in local market. The Company is currently expanding aggressively and doing very well in the current market.
Costing has always been a crucial area of concern for the Company. Mr.Freck, the Assistant Finance & Costing Manager, was assigned to lead this area, to manage financials together with the costing to ensure proper budgets and plans are put in place to run business smoothly in the coming years. He has approached you with some concerns outlined below.
a) Cost control and cost reduction are used inter-changeably. However a school of thought is of the opinion that there is a major difference between these two terms.
Required:-
Assist Mr.Freck to guide and explain in detail on each terms above, share the differences and explain the steps involved in "designing a process of cost control system".
b) In product costing, the costs attributed to each units of production, may be calculated
by using either:
i) Absorption costing, or
ii) Marginal (or direct or variable) costing.
Required:-
Critically describe absorption and marginal costing and outline the strengths and weaknesses of each method.