|Date:||December 26, 2010|
|Length:||2 / 325|
|No of views:||0|
|Essay rating:||good 0, average 0, bad 0 (total score: 0)|
This will need Activity-Based Costing (ABC) system. Let’s analyze the case of customer A and customer B by the ABC system. Both customers have the same amount of sales and the same product cost of $50,000, and under current system they are charged the same price for service sales. However, these two customers consume very different level of services from Allied...
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However, these two customers consume very different level of services from Allied. So let calculate the true cost that each of these two customers impose on Allied..
Currently, customer A and B both face service charges of 32.2% of product costs, which equals $50,000 * 32.2% = $16,100. Thus, it is apparent that Allied over-charged customer A: $16,100 - $8,481...
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Total price: $10.00
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