Case Study: Cost Accounting at XYZ Manufacturing XYZ Manufacturing is a mid-sized manufacturing company that specializes in producing automotive parts. Recently, the company has been experiencing costrelated challenges, which have impacted its profitability and competitive position. As a financial consultant, you are brought in to assess the cost accounting system and suggest improvements. Background: XYZ Manufacturing's cost accounting system has become outdated and no longer provides accurate insights into the costs assoclated with manufacturing its products. This has led to pricing inefficiencies, difficulties in cost control, and a growing concern over the company's competitiveness in the market. Key Challenges: 1. Inaccurate Cost Allocation: The current cost accounting system inaccurately allocates costs to products, making it challenging to determine the true cost of manufacturing each product. 2. Pricing Inefficiencies: Due to the cost inaccuracies, XYZ Manufacturing often prices its products in a way that doesn't reflect actual production costs, leading to potential losses on certain products and missed profit opportunities on others. 3. Cost Control: Without a precise understanding of costs, the company struggles to control its expenses and optimize its operations. Questions: 1. Evaluate the existing cost accounting system at XYZ Manufacturing, considering the challenges it faces. Discuss the implications of inaccurate cost allocation on the company's flinancial performance and competitive position. 2. Based on your assessment of XYZ Manufacturing's cost accounting system, propose specific improvements to address the challenges. Explain how these improvements can enhance the accuracy of cost allocation, support pricing efficiency, and facilitate better cost control