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capella234 capella234
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Assume you have been hired by a company that is considering implementing an activity-based costing system. One of your co-workers is not eager to change and believes the benefits of moving to activity-based costing will not be worth the time and effort of implementing the new system. Explain to your co-worker the characteristics of an organization that make it a good candidate to implement activity-based costing and how activity-based costing might benefit the company.
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Managerial Accounting

Managerial Accounting


Edition: 4th
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LondonLondon
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A problem with traditional product costing is that it does not reflect the way costs are actually incurred during the production process. Some jobs might look profitable when they are actually losing money. Activity-based costing works for companies that produce products or delivers services that differ in complexity or in their consumption of common (overhead) resources. Indicators that an activity-based costing analysis may be appropriate include:
1.Bids for complex products are accepted, while bids for simple products are rejected.
2.High-volume jobs show losses or minimal profits, while low-volume jobs show
healthy profits.
3.Bids for jobs that require "special" processing are always accepted.
4.Some manufacturing departments run at capacity, while others have minimal
operations.

This verified answer contains over 240 words.
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capella234 Author
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A month ago
Helped a lot
njn;l
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Yesterday
Correct Slight Smile TY
prime7105
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2 hours ago
Good timing, thanks!
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