Exe pic is a motor car manufacturer. Exe pic has been in business for many years, and it has recently invested heavily in automated processes. It continues to use a total costing system for pricing, based on recovering overheads by a labour hour absorption rate.

Exe pic is currently experiencing difficulties in maintaining its market share. It is therefore considering various options to improve the quality of its motor cars, and the quality ofits service to its customers. It is also investigating its present pricing policy, which is based on the costs attributed to each motor car.

Required:

(a) Discuss the significance to Exe pie of developing and maintaining communication links with suppliers and customers. (15 marks)

(b) Explain the benefits (or otherwise) that an aetivity based eosting system would give Exe pic.