PART B:Activity based costing

The companys controller recently attended a conference at which activity-based costing systems were discussed. He became convinced that such a system would help Future Logistics management to understand its product costs better. He got top managements approval to design an activity-based costing system, and an ABC project team was performed to discuss how they can benefit from ABC in preparing the capital budget.

Write a memo to the team, in no more than 500 words, commenting on the situation companys team has been facing. In your memo explain how an activity-based capital budget differs from a conventional capital budget and describe the impact of activity based costing on capital-budgeting decisions.