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Read the scenario description provided below. Scenario: BTN 17-4 Amelia Rustov, the chief executive...

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Accounting

  1. Read the scenario description provided below.

Scenario:

BTN 17-4 Amelia Rustov, the chief executive officer (CEO) of your company (and your boss) recently returned from a luncheon meeting where activity-based costing was presented and discussed. Though her background is not in accounting, she has worked for the company for 15 years and is thoroughly familiar with its operations. Her impression of the presentation about ABC was that it was just another way of dividing up total overhead cost and that the total would still be the same no matter how you sliced it.

Required

Write a memo to Rustov, no more than one page, explaining how ABC is different from traditional volume-based costing methods. Also, identify its advantages and disadvantages compared with traditional methods. Be sure your explanation can be understood by someone who is not an accountant.

The memo heading should include the following data:

To: Amelia Rustov, CEO

Subject: (Make sure your entry here catches the readers attention, describes the main point of your memo, and is short.)

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