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Product Description
Overview : Classifying a company ’ s costs allows for an in-depth analysis of the impact that changes in output have on revenues , costs , and net income or net loss . A cost-volume-profit analysis will be completed in order to determine the breakeven point . Relevant costs will be used to prepare a flexible budget . Additionally , an appropriate costing system should be selected and the choice should be substantiated with reasonable rationale . Finally , a memo should be prepared for management that summarizes the results of the quantitative analysis and makes recommendations for an optimal costing system to be ethically used by key decision makers .
For Milestone Three , you will make a recommendation to the MDE management team on whether the company should switch from process costing to activitybased costing ( ABC ) for the bird feeder division . This is an exploratory discussion , but management would like to know more about the differences between the two costing systems and if a different costing system might work better for the company . Submit a 2 – 3 page Word document that addresses all of the critical elements below of Section III
Specifically , the following critical elements must be addressed :
III . Main Costing Systems – Activity-Based Costing vs . Process Costing
a ) Identify the cost allocation system that would benefit this company most . Justify your response .
b ) Does this cost allocation system meet management planning and control goals ? Explain .