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Accounting:Activity based costing and Traditional costing.

See attached file.

For this assignment you will need to read the information provided in Exercise 5.8 of the textbook. This exercise relates to a company that manufactures three types of refrigerators. As the management accountant for this business, you have been asked by your boss to compute two separate costs for each line of refrigerator and then complete a detailed analysis.

After you have read the information provided in the textbook, complete the following:
Calculate for each product the full cost and selling price determined by:

The original costing method
The activity-based costing method

Once you have the figures computed, prepare a detailed report for your boss that includes a discussion of the following information:

An analysis of implications involved with each of the two costing systems and subsequent price differences.

An analysis of each costing system, including a recommendation of which cost system you would recommend or any changes you would suggest to the pricing strategy.

An analysis of the business/strategic options that exist for your organization in light of the new information, including possible pricing strategies.

The assignment should be prepared as a concise business report to your supervisor that includes both the figures computed and the analysis of the situation

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Solution Summary

The problem deals with estimating the cost, of a product, under activity based costing and traditional costing techniques.