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2. What will be the consequences on the competitive situation of the company if the management decides to switch from the existing costing system

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2. What will be the consequences on the competitive situation of the company if the management decides to switch from the existing costing system to: I. a contribution margin approach where overhead costs are treated as common costs, (3 marks) II. a traditional costing system that uses machine hours to allocate the overhead costs. (3 marks) (You should show calculations to support your argument)

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