Reference no: EM132467168 , Length: word count:2000

UCBP4006 Management Accounting Assessment - University of Cumbria, UK

Problem - Avitex limited are a manufacturing company that have been operating for thirty years. They produce a range of products within the telecommunications sector. They operate two large factories and employ a thousand workers. Last year, the company turnover was £20,560,000 and the board are confident that they can expand further in the future. A new custom factory is currently being built and Avitex are launching ten new products into the market. Avitex are planning on issuing shares to finance their expansion. Analysts predict that the share issue will be a big success with investors.

They have recently appointed a new financial controller who believes that the company is spending too much time and energy in determining the cost of each of the products. The focus and energy should be placed on other tasks instead as cost estimates are usually wrong anyway. There are also too many different costing techniques which makes things even more complicated.

Required - Critically analyse this viewpoint and whether costing still has an important role to play for Avitex limited.