Question: Roses Sdn. Bhd. uses one raw material, bronze ore, for all of its products. It spends considerable time getting the bronze from the ore before
Roses Sdn. Bhd. uses one raw material, bronze ore, for all of its products. It spends considerable time getting the bronze from the ore before it starts the actual processing of the finished products, bangles, rings, lockets, etc. Traditionally, the Roses Sdn. Bhd. made one product at a time and charged the product with all costs of production, from ore to final inspection. The problem statement here is that in recent months, the cost accounting reports have been somewhat disturbing to management. It seems that some of the finished products are costing more than they should, even to the point of approaching their retail value. It has been noted by the accounting manager that this problem began when the company started buying ore from different parts of the world, some of which require difficult extraction methods. Explain how the company might change its accounting system to reflect the reporting problems better
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