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Such a costing method improves cost measurement by organizing information around activities (Thompson, 2003). The group will complete requirements (a) through (e) found at the end of the case. They will then, find three sources on the Internet, that compare and contrast activity-based costing and functional-based costing systems. And, to demonstrate, the group will discuss under what scenarios each system might lead to better decision making at Huge Company.
a.) Compute the costs of each job using the current cost system.
Total Labor cost $90,000,000
Total working hours per year $2,000
Total number of employees 1,000
Average cost per hour per person – 90,000,000/ (2,000 X 1,000) = $45...
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