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Home Q & A Board Other Fields Homework Help Business Accounting
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jerico jerico
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9 years ago
The Pitt Corporation has been outsourcing data processing in the belief that such outsourcing would reduce costs and increase corporate profitability. In spite of this, there has been no meaningful increase in corporate profitability.

Previously, Pitt used a single-rate method to allocate data processing costs. A per unit cost for data processing was computed and compared to the price of the outside supplier. The price of the outside supplier was lower and thus, the outside bid was accepted.

Required:
Formulate a possible reason why Pitt's profitability has not shown improvement in terms of the cost allocation method used.
Textbook 
Cost Accounting

Cost Accounting


Edition: 14th
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cyborgcyborg
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9 years ago
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jerico Author
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#2
9 years ago
This solved my problem perfectly, thank you for your kind input.
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#3
9 years ago
Sweet, you're welcome.
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