Kaplan ('Relevance regained', Management Accounting, September 1988) states the view that the 'time-honored traditions of cost accounting' are 'irrelevant, misleading and wrong'. Variance analysis, product costing and operational control are cited as examples of areas where information provided by management accountants along traditional lines could well fail to meet today's needs of management in industry.
(a) State what you consider to be the main requirements for effective operational control and product costing in modern industry; (10 marks)
(b) Identify which 'traditional cost accounting' methods in the areas quoted in (a) may be considered to be failing to supply the appropriate information to management, and explain why;
c) Recommend changes to the 'traditional cost accounting' methods and information which would serve to meet the problems identified in (b).