Potter Corporation has gained considerable market share in recent years for its? specialty, low-volume, complex line of? products, but the gain has been offset by a loss in market share for its? high-volume, simple line of products. This has resulted in a net decline in its overall profitability.

Requirement

Advise management about specific changes that may be required in its cost accounting system and explain why the existing system may be inadequate.

Potter Corporation should

1. Keep its current costing system

2. Switch to activity-based costing

3. Switch to traditional costing