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The managing director of Allens Home Interiors, an interior design

firm, asked the accountant to consider developing a service costing system. The accountant responded: 'We're a service business. All our costs are period costs that have to be expensed in the period in which they have been incurred. We don't need product costing.' The managing director is furious. He's never heard of period costs!
Suppose you are the financial advisor of Allen's company and he asks you to evaluate the accountant's response and to prepare a clear explanation of how service costing could help him manage the business.

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Subject: Accounting, Business

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