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Analyze reasons behind classifying costs on the basis of types, behaviour, function and relevance

You have been appointed as the assistant management accountant of a company of your own choice, operating either in the service or manufacturing industry. The company wishes to improve operating efficiency by controlling cost and improving profitability. The following information is provided: • The expected sales for next three months in units are: July –10,000 units, August-12,000 units, September 14,000 units. • Selling price per unit-£25 • Production units: • July –12,000 units, • August-13,000 units, • September-15,000 units. • There was no opening stock for July. Your task is to write a report to the Board of Directors that will be discussed in the next board meeting. You are required to: • Analytically discuss the role played by a Management Accountant for planning and controlling business activities. (300 words) • Analyse the reasons behind classifying costs on the basis of types, behaviour, function and relevance. prepare a cost card assuming that direct material cost per unit is £5,direct labour is £ 8 per unit and variable overhead per unit is £4.

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