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You, the managerial accountant, are asked by the CFO (Mr. Smith) of Wilson-West Manufacturing (a new company) to set up a product costing system. The following are the types of expenses that will be included:
In a memo format, explain to Mr. Smith and the president what will be included in product costing.
Question 1: Explain what is involved in a product costing system.
Question 2: Explain why Wilson-West Manufacturing needs to have a product costing system.
Question 3: Allocate the above expenses as fixed, mixed, or variable expenses.
Question 4: Prepare calculations for the following, and explain your computations:
Question 5: Explain this to Mr. Smith who will prepare these calculations on a monthly basis.
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