Briefly explain to the partners the difference between the OAR and ABC methods and why ABC might be a better tool to use for their business; -

Accounting

26 Oct 2021 Sylvia

Briefly explain to the partners the difference between the OAR and ABC methods and why ABC might be a better tool to use for their business;

Management Accounting

The spreadsheet must be designed so that input variables can be changed to enable‘what if’ (sensitivity) analysis and it should be clear to the user (work on the assumptiont hat the end user is not an accountant) which numbers can be changed to see their effect on overall costs and which cannot. Any sensitivity analysis should update both the

OAR and ABC results from one change in inputs.

Report

Write a 1500 word report to the DVP partners. You should:

1) Briefly explain to the partners the difference between the OAR and ABC methods and why ABC might be a better tool to use for their business;

2) Set out the differences in costings between methods for the four Cases you have analysed;

3) Discuss the implications of these differences for the business and recommendations about how the business might become more profitable. Your recommendations should be sensitive to the business environment and take into
account costs, drivers and pricing decisions.