CASE STUDY

You have just been appointed as a consultant to an organization with increasing sales and expanding customer acceptance in the 25-30 year-olds clothing market.

A growing concern of top management that has been brought to your attention is as follows:

Top management has found the relationship between the reported production costs and selling prices for the various lines of clothing (simple to complex clothing) hard to match up, but are reluctant to implement a proper product costing system on the basis that the company accountant is already far too busy; "why can't we just use the same financial reports prepared for the shareholders for which we are already paying so much money for anyway!" being their usual push-back comment.

QUESTION:

Discuss the current no product-costing policy, and present an argument to top management in support of implementing a Job-Costing system, focusing on how such a policy will benefit the business going forward.

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