Question 1
Product costs may be useful for a wide range of decisions ranging from price setting to making decisions regarding continuing or dropping of a product or service.
Select an organization with which you are familiar. Using your own words as much as possible, and in not more than 1,500 words,
(a) Provide a brief description of the organisation - background, the organizational structure, the nature of business, the industry and the environment it is operating in, its products/services, etc.
(b) Describe the costing system adopted and how it is used to arrive at the cost of products or services.
(c) Does the costing system meet the needs of the organization? Discuss.
Question 2
Many managerial decisions (such as production, marketing, pricing decisions and cost management) require a good understanding and application of cost terminologies.
Based on the organization that you have chosen for Question 1, explain and provide one (1) example of the following cost terminologies:
- Direct and indirect costs.
- Variable and fixed costs.
- Committed and discretionary costs.
- Controllable and uncontrollable costs.
- Upstream and downstream costs.