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Imagine that the CIO of Cool Air Inc., a ceiling fan company where you have recently been hired as an accountant, has asked you to recommend and justify an appropriate cost accounting system. This is an important opportunity for you. You recognize that the CIOknows the best methodbut wants to test your understanding of cost accounting and how you articulate your ideas and positions.

Company Background

There are several specific steps to assembling a ceiling fan (this company producesseveral models) that require machinery, labor, and support from multiple departments. Activities include:

• Components:
• Blades.
• Motor.
• Remote control.
• Fan housing.
• Power switch.
• Departments include:
• Production scheduling.
• Materials receiving.
• Research and development.
• Machine maintenance.
• Product design.
• Parts administration.
• Final product inspection.
• Materials handling.

The CIO identifies three cost accounting method possibilities that you should consider: Activity-based costing (ABC), job costing, and process costing.

What recommendation should be presented to the CIO justifying the costing system that is most appropriate for the company described in the scenario above? The recommendationshould do the following:

• Compare the three costing systems in a way that highlights differences in how they would impact the company's operations and finances.
• Justify the appropriate costing system selected for the company that includes an explanation of the criteria considered and clear evidence of why it is chosen over the other methods.
• Identify then analyze the most significant impact of implementing the costing system chosen for the company's finances.
• Analyze the most significant impact of implementing the chosen costing system for the company's operations.

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