Unformatted text preview: 3 2 9 The following information regarding manufacturing overhead is collected: Mfg. Overhead Mfg. Overhead Costs Allocation bases Set-up £ 35,400 Number of set-ups Ordering materials £ 29,980 Number of material orders Handling materials £ 7,700 Number of times material was handled Inspection £ 33,320 Number of inspection hours £106,400 Required: 1-Identify the operating income for each product using the traditional method and ABC. 2-Do you recommend Mido to drop product B, Explain your answer and clarify how cost allocation may distort cost information. 3-Is there any limitation of ABC? Explain....
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- Spring '11
- Cost Accounting, total direct costs, single cost pool