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Agweagea

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Issue:

Business

 

Written by:

Jessica P

 

Date added:

September 29, 2010

 

Level:

 

Grade:

A

 

No of pages / words:

2 / 325

 

Was viewed:

10038 times

 

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Essay content:

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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