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.