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Superior Manufacturing Company
The case study of Superior Manufacturing Company is discussed in detail. Some key questions are tackled in this paper which is related to the case study on hand. The costing system is evaluated in detail and recommendations are suggested to the management for improving the performance of the company.
Question No.1:
For Superior Manufacturing an effective costing system was absolutely essential because the changes that were made in the management structure. For two years consecutively two different managers were leading the team. They both were not familiar with the way the operations were taking place in the company and had different approached to dealing the situation. Another important aspect to consider is that the company is operating in a rigid nature of business. They are faced with fierce competition from players that are larger in scale than the company and have a sound financial backing to support them unlike Superior Manufacturing Company. In such a situation the management had only one option to lower the costs of production and show greater flexibility in its operations...
An effective cost system played an integral role for the management to lower the costs and make decisions to find the right balance between cost and value.
The managerial purposes that are to be served by an accounting / cost system are not sufficient in the case of Superior Manufacturing Company. The processes of the company are all horizontally integrated and the information provided by the current costing system is aggregated, brief and unpunctual to address the accounting issues. The company was using the same accounting system which it was using in the past years in order to take short-term decisions and develop a long-term goal after some time, and to control processes and activities by controlling the costs and continuous evaluation.
Question: 2
There are a number of imperfections in the costing system however it is serving some purpose to the management. The main strengths include that the costing system is a full cost system which gives a clear picture of the costs associated with the products and the processes and differentiates the indirect costs. Punctuality is…
References:
Jae K. Shim, Joel G. Siegel (2009). Modern Cost Management and Analysis 3rd Ed. Barron's Education Series, Inc.
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