Managerial Accounting
Managerial Accounting
15th Edition
ISBN: 9780078025631
Author: Ray H Garrison, Eric Noreen, Peter C. Brewer Professor
Publisher: McGraw-Hill Education
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Chapter 7, Problem 1AE

a.

To determine

To identify: The reason for more than double of customer margin under activity based costing when the number of units are doubled.

Introduction: Activity based costing is standing for the ABC. It is that method in which organization identifies the activities and assign the cost to each resource according to the use of them.

b.

To determine

To identify: The reason of double loss of traditional cost margin.

c.

To determine

The method which gives the accurate picture regarding the effect on profit and the number of units ordered increases.

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Cariveh Co sells automotive supplies from 25 different locations in one country. Each branch has up to 30 staff working there, although most of the accounting systems are designed and implemented from the company's head office. All accounting systems, apart from petty cash, are computerised, with the internal audit department frequently advising and implementing controls within those systems. Cariveh has an internal audit department of six staff, all of whom have been employed at Cariveh for a minimum of five years and some for as long as 15 years. In the past, the chief internal auditor appoints staff within the internal audit department, although the chief executive officer (CEO) is responsible for appointing the chief internal auditor. The chief internal auditor reports directly to the finance director. The finance director also assists the chief internal auditor in deciding on the scope of work of the internal audit department. You are an audit manager in the internal audit…
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