You`ve assumed the role of senior Management Accountant for a renowned medical supplies manufacturer operating factories in India and the United Kingdom, specializing in distinct product lines. The Indian factory focuses on mass production items like face masks, syringes, and needles, while the UK facility specializes in tailor-made medical equipment such as MRI machines.

The company employs two primary distribution channels: sales through distributors and direct sales to end customers. As part of your responsibilities, you`re tasked with assessing current business practices and recommending short, medium, and long-term improvements. Here are key observations from your analysis:

Following CPID training on Management Accounting, both factory managers recommended shifting away from absorption costing, but they differ on the optimal approach. The company`s performance evaluation predominantly relies on financial metrics, overlooking crucial non-financial factors impacting business outcomes. Budgeting adopts a rigid top-down approach, limiting flexibility amid market volatility and cost control challenges. Reports from the Indian factory highlight material shortages leading to increased idle time and reliance on costly substitute materials.