Explain how activity-based costing could overcome the deficiencies inherent in the existing costing

The company’s management accountant, Ursula B. Bright, had become concerned about the conventional product costing stem at Cravings for Cakes. The manufacturing people were also sure that the costing system was distorting product costs. Write a report to critically address the following issues: 1. Describe the changes in cost structure that are likely to have occurred at Cravings for Cakes over the last 20 years, and explain their causes. 2. Explain whether the existing costing system understates or overstates the cost of a) Lamington b) Danish Pastry 3. Explain how activity-based costing could overcome the deficiencies inherent in the existing costing system. 4. What factors should Ursula B. Bright consider when deciding whether to use Activity based costing.