Case Study Toys-4-Children Ltd (T4C) manufactures and sells children’s toys in Australia. The company currently faces...

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General Management

Case Study Toys-4-Children Ltd (T4C) manufactures and sellschildren’s toys in Australia. The company currently faces thefollowing core issues and challenges: • T4C aims to introduce a newproduct – ‘Gold Fish’ – and it needs to develop some preliminarycost estimates. • T4C faces increasing competition from newcompetitors who are importing children’s toys from China andselling them at low prices in the Australian market. • T4C isstruggling with decision making and control over operations in thehighly competitive and innovative market environment. Required: 1.Identify and critically discuss the management accounting tools andtechniques you would apply to develop cost estimates for the newproduct. 2. Identify and discuss what you think should be thesalient features of T4C’s business strategy to effectively dealwith its competitors. 3. What recommendations could be made to T4Cto develop efficient decision making and control systems to ensureits sustainability in the highly competitive and innovative marketenvironment?
please take a reference from Horngren's Cost Accounting: AManagerial Emphasis, 3rd Edition

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1 Identify and critically discuss the management accountingtools and techniques you would apply to develop cost estimates forthe new productAnsBelow are the tools for costing1 Batch costing The cost of a batch of identical products isascertained and each batch of products is a cost unit for whichcosts are ascertained2 Process costing Costs are accumulated for each process Toarrive at a cost per unit the total cost of the process is dividedby the number of units produced The finished product of oneprocess is transferred to the next process3 Operating cost In this method refinement and more detailedanalysis is carried out on the number of the process involved Thisprocess analysis minute costs and ensures greater control over thecostTechniques involved are as below1 Standard Costing It refers to the preparation of standardcosts and applying them to measure the variations from standardcosts and analyzing the variations with a view to maintain maximumefficiency in production What is done in this case is that thecosts of each article are determined beforehand under current andanticipated conditions but sometimes they are determinedbeforehand under normal or ideal conditions Then actual costs arecompared with the predetermined costs and deviations known asvariances are noted down Thereafter the reasons for the variancesare ascertained and the necessary steps are taken to prevent theirrecurrence2 Marginal Costing It refers to the ascertainment of marginalcosts by differentiating between fixed costs and variable costs andthe effect on profit of the changes in volume or type of output Inthis case only the variable costs are charged to products oroperations while fixed costs are charged to profit and loss accountof the period in which they arise3 ActivityBased Costing In a business organizationActivityBased See Answer

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