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.
c) What are the ethical implications that should be considered with this cost allocation system?