Assume the Role of Molly Wright

Essay

Assume the role of Molly Wright. Write a brief report outlining the basics of a cost management information system. Include in your report the following:
● Resources and costs
● Supply of resources vs. the use of resources
● Classification of costs (three dimensions of resources)
● Alternative costing systems
Lyon Toys, Inc. (LTI) manufactures a variety of electronic toys for children aged 3 to 14 years. The company started as a Ma & Pa basement operation, and grew steadily over the last nine years. It now employs over 100 people and has sales revenue of over $250 million. Katie Burger, the CEO of LTI also recognizes that competition has increased during this period; therefore future growth will not be easy. Burger recognizes that one of the areas of weakness is the accounting and costing system. Burger's maternal uncle, Martin, had maintained the accounts for the company. He meticulously kept track of all the invoices that were received, payments made, and painstakingly prepared crude annual reports. With Martin passing away at the age of 85, Burger decided to hire a professional cost management expert to keep track of the company's costs. She hired Molly Wright, who had just completed her CMA.
After acquainting Wright with the company and its people, Burger decided to get down to business. She called Wright to her office to have a serious conversation about accounting and costing, in particular. Burger: Molly, I would like you to pay particular attention to developing an official costing system. Currently, we don't have one. I believe this should be your first priority because competition is rising and if we do not understand our costs, we might start losing to our rivals. Wright: I understand your point very well, Ms. Burger.
Burger: Call me Katie.
Wright: Very well, Katie. I have a few ideas that I picked up from my CMA courses that I think are worth implementing. However, it looks like we need to start with the basics.
Required