You work for Liu, Krotova, and Hockersmith PC, a top regional accounting firm that specializes in consulting services. Dakota Office Products has engaged your firm to evaluate its current costing system.
Prepare a report to present to the General Manager, Jen Malone. Your report should contain responses for the following:
1) Why might Dakota’s existing pricing system be inadequate for its current operations? (1 point)
2) Develop an activity based costing system for DOP.
a. Provide justification for cost pools. (1 point)
b. Provide support for your calculations of cost drivers. (1 point)
c. Provide a diagram of the cost flows, to help managers understand the new system. (1 point)
3) Using the new ABC system, provide an analysis of Customer A and Customer B. Be sure to compare your analysis to the analysis presented in the case under the old costing system. (2 points)
4) Provide a recommendation to either change costing systems or to keep the old system. Be sure your answer provides both quantitative and qualitative support. (2 points)
5) Prepare a one-page memo summarizing your recommendation and your analysis. This should be the top page of your assignment. (2 points)
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