Cost Accounting-You are a Costing Manager in Jackfew & Co, a company

QUESTION

You are a Costing Manager in Jackfew & Co, a company which manufactures and sells waterbottles in local market. The Company is currently expanding aggressively and doing verywell in the current market.Costing has always been a crucial area of concern for the Company. Mr.Freck, the AssistantFinance & Costing Manager, was assigned to lead this area, to manage financials togetherwith the costing to ensure proper budgets and plans are put in place to run business smoothlyin 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 ofthought 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 thedifferences and explain the steps involved in “designing a process of cost controlsystem”. (20 marks)b) In product costing, the costs attributed to each units of production, may be calculatedby using either:i) Absorption costing, orii) Marginal (or direct or variable) costing.Required:-Critically describe absorption and marginal costing and outline the strengths andweaknesses of each method. (20 marks)

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