Question
8 Points) Currently, the company relies on a third-party carrier to deliver their frozen lobster rolls to different parts of the country. In order to
8 Points) Currently, the company relies on a third-party carrier to deliver their frozen lobster rolls to different parts of the country. In order to streamline the storing and delivering of frozen lobster rolls that are ready to be shipped to customers, the senior management plan to invest $3 million to build a distribution center in the suburbs of Portland next year. The book value of the distribution center will be depreciated over the next 30 years. Could you help Olivia and her supervisor determine how the depreciation expense of the distribution center will affect the gross margin of the two products if the company uses the traditional costing system? If the company uses the activity-based costing system instead, how will the depreciation expense of the distribution center affect the product margin of the two products? For simplicity, assume that sales revenue and other costs remain the same next year.
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