Detailed Instructions: In a business setting, we are often asked to write a memo to communicate with internal and external professionals. Therefore, I felt it especially beneficial for you to practice writing a memo dealing with our managerial accounting concepts.

Background:

Currently, you work at Technology on Demand (TOD), which manufactures mobile technology such as flip phones, smartphones, notebooks, and smartwatches. The company slogan is Connection, Communication, and Coordination...access when and where you need it! You are a senior accountant in the accounting department and have been with the company for five years. Since the company's inception eight years ago, TOD has operated under a traditional costing system based on machine hours. Company growth has really taken off in the last three years. Michelle Dodd, the controller hired last year, is always open to new ideas. In fact, she welcomes communications to discuss how the company is doing and what, if anything, the company could or should be doing differently. This is your chance to make a good impression on the controller and management! It is your understanding that Brad Jones, the company CFO, has submitted paperwork for retirement. Therefore, there will be opportunities for people to move up or change positions within the company. You would have an interest in the controller position. You want to propose to the current controller the idea of evaluating TOD's costing system. Perhaps, it is time for a change. You briefly mention your idea to the controller. Michelle is excited about your initial comments and asks that you send her something in writing. The controller asks that you put your ideas in a memo to her only. In turn, she will consider and include you on more research/analysis for the two of you to present to the senior management of the company.

In consideration of the background, prepare a memo in a Word document to submit to the controller. Compare a traditional costing system with an Activity-Based Costing (ABC) system. Include the similarities, differences, advantages, disadvantages of the two costing systems. Why are you suggesting the costing system be evaluated now? What do you feel this could mean for the company?