Posted: January 8th, 2016

Identify the problems associated with the product costing system currently used by AClass Plastics and for each problem explain why it is a problem drawing from the facts of the case

You are Anna Lyst. After attending the professional seminar on Activity-Based Costing (ABC) and conducting a preliminary analysis of the product costing system currently used by ‘AClass Plastics Pty. Ltd.’; you are convinced that the company would benefit from implementing an ABC system. However, in order to do so, you must convince the company’s managing director, Ms. Gill Bates, of the benefits of such a move. In order to assist her in her decision, Ms. Gill Bates has asked you to prepare a report addressing the following issues: Question 1:
I. Identify the problems associated with the product costing system currently used by AClass Plastics and for each problem explain why it is a problem drawing from the facts of the case. II. For each problem you have identified, explain how AClass plastics will overcome it (DO NOT simply explain the benefits / disadvantages of ABC to explain how AClass plastics will overcome each of the problems, you MUST use the facts from the case to back up your discussion to be awarded marks). III. Your discussion should address the general principles underlying each approach and the advantages of ABC to AClass Plastics. You will not be awarded marks for simply copying the information from the text. Make sure to use facts from the case to back up your discussion (6 marks