Reference no: EM132585645

Payetta Toxic Climate Inc. processes many of its waste items to the demands of its largest customers, most of which are large retail distributors. To keep the accounting system simple it has always assigned cost by the weight of the finished product. However, with increased competition it has had to watch its prices closely and in recent years several items have incurred zero profit margins. After several weeks of investigation, your consulting firm has found that while weight is important in processing of waste, numerous items have very distinct processing steps and some items are processed through more steps than others.

Required:

Question 1: Based on the findings of your consulting firm, what changes might you recommend to the company in the way of cost allocation among its products? Provide at least four (4).