You are employed by McCann LLP, an Accounting Firm based in Cambridgeshire. The firm has recently been asked by a client, a medium-sized manufacturing company in Peterborough, to provide advice and recommendations to improve the companys existing costing system.

The CEO of the manufacturing company is keen to implement standard costing.

Requirement: Draft a report for your client that:

a. Outlines the purposes of standard costing (5 marks)

b. Explains the operating mechanisms of the standard costing system (12 marks)

The company is also looking to expand and wishes to understand the scope, structure and purpose of transfer pricing.

Requirement: Draft a report for your client that:

c. Explains how transfer pricing works