You are a consultant management accountant who has been engaged by a medium to large, fast growing company Jessup ltd. The company is involved in advertising and public relations and is run by four directors who are all advertising experts. While the company is doing very well they feel it has reached a stage where they need better management of the accounting function. Generally, they are unsure of the strategic benefits a senior management accountant would bring and particularly they have concerns with which costs are most relevant to decision making and of any methods by which they can accurately cost their activities.
You are required to produce a report to the directors which addresses the following three questions:
Question 1: What are the key roles which a strategic management accountant would undertake in an organisation such as Jessup?
Question 2: What is meant by the terms relevant and irrelevant costs and revenues in Strategic Management Accounting decision making? Include several small numerical examples in your answer.
Question 3: What are the benefits and problems of introducing activity based costing into an organisation such as Jessup?