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GROUP PROJECT Cost Behaviour Relevant Cost and Incremental Analysis EMBA27JB
GROUP PROJECT Cost Behaviour Relevant Cost and Incremental Analysis EMBA27JB
GROUP PROJECT Cost Behaviour Relevant Cost and Incremental Analysis EMBA27JB
GROUP PROJECT
Managerial accounting relates to the provision of financial and non-financial information to assist
in performance evaluation and control to drive sustainable business success. Its activities and
responsibilities include three broad functions which are planning, directing and controlling.
Planning requires the managers to look ahead and establish appropriate objectives. A key
objective of management is to add value to the business and ensure sustainability.
In order for the managers to plan, direct and control operations effectively, they need good and
relevant information. One of the crucial types of information is the one that relates to costs. Cost
information is essential as it provides a solid basis for financial control and management
efficiency.
Costs can be classified into different categories for different analysis purposes. For example,
costs can be classified based on function such as production cost, administrative cost, and
distribution cost. In addition, cost can be classified based on behaviour.
Cost behavior analysis is the study of how specific costs respond to changes in the level of
business activity. In other words, it assists the management to understand how operating costs
behave in relation to a change in an organisation’s level of activity. This is crucial especially for
cost management.
Further, costs can be classified based on its relevance to decision making, which includes
relevant costs and irrelevant costs. In incremental analysis, the only factors to be considered are
those costs and revenues that differ across alternatives, i.e., relevant cost. Hence, incremental
analysis acts as a useful decision-making tool used to assess financial information and to derive
a decision between two or more alternatives.
1
You are required to:
3. The group assignment should be able to demonstrate a thorough grasp of the essentials of
costing for the business example, i.e., explore in-depth cost-structure and relevant cost for
the business for Incremental Analysis.
4. Prepare the report that is required to be submitted in an Executive Report format suitable for
executive committee of the said company under study for relevant decision making to take
place before it goes to the Board.
a. a pdf version of the final report, together with references and appendices - only one pdf file
and name your file as follows:
EMBA27JB_GROUPX (write your group number as either 1, 2, 3 or 4)