The Senior Manager of a company refused to implement an activity-based costing system as recommended by the Accountant because it would cost approximately $40,000 to implement this new system. The Manager felt that better use could be made of the money such as investing in projects that could yield positive returns or using the money to improve customer satisfaction.

Questions

1. How does a customer benefit by our spending $40,000 on a supposedly better accounting system?”

2. How should the Accountant respond?

Answer rating: 100% (QA)

SOLUTION 1 Customers benefit from a company implementing an activitybased costing system in several ways a Accurate Pricing Activitybased costing allows a company to determine the true cost of produci... View the full answer