ACC2200: Introduction to Management AccountingMajor Assignment 1By Mayank Sohani (Student ID: 28825942)Question 1:Cost classifications are often utilised within different areas of managerial decision making. Indeed,this allows company’s with different objectives, to separate their costs and to structure them in a waythat a company’s Board of Directors can analyse and revise.Due to the challenges to remaincompetitive, it is imperative for internal users of cost information to analyse different ways to manage,estimate, and control costs in relation behavioural, traceability and the value chain of operations.Recognising costing in relation to behaviour cost classifications would yield high benefits for TFC.Tomohiro could use the information relating to fixed, variable and mixed costs to make strategicdecisions regarding cash flow budgeting, controlling costs and making fundamental economicdecisions (Smith and Andon, 2018). In identifying certain variable and fixed costs, Tomohiro canconduct regression analysis to interpret how much tea-related products he must sell to cover thesecosts. Indeed, this information can then be used in terms of price setting and conjuring a productmargin large enough to not only remain competitive within the market, but also profitable.Value chain analysis can be utilised as it segregates the “linked processes” (Smith & Andon, 2018) thatcalculates and separates costs throughout the production process of the good. Tomohiro can separatecosts in terms of upstream and downstream costs. In terms of upstream costs, Tomohiro would findit highly useful in judging the cost effectiveness his Research and Development (RD) phase in relationto sales. An important decision that may need to be made is whether to continue putting cashresources into RD, in times where the probability of product is slim. In addition, it can also be seenthat the company is struggling in fighting for “shelf space” in retail outlets. Tomohiro can use datacollated through the value-chain to look at ways to better manage such costs.
