the simple system. The reason is that books use far fewer S,G & A resources relative to its merchandise costs and café uses far greater S, G & A resources relative to its merchandise costs. 3. To: Super Bookstore Management Team From: Cost Analyst Re: Costing System The current accounting system allocates indirect costs (S,G & A) to product lines based on the Cost of Merchandise sold. Using this method, the S, G & A costs are assigned 54%, 35%, 11%, to the Books, CDs, and Café product lines, respectively…
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