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Chapter 3 Example - Activity Based Costing Example In...

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In Macon’s boat production company, he is making two boats: a 21’  “production” boat where they are all essentially the same and a 24’ custom  boat that is made to order.  He has been using a traditional cost system to  allocate overhead but his astute accountant, Carter, has told him that she  feels there are several drivers of his overhead cost and has suggested the  following cost pools and measurements: Engineering Design: # of engineering hours Customer Orders: # of orders placed Production Time: # DLH in production Design Time: # of design hours  The following pertains to his business and production: The 21’ boat has $6,000 of DM, 300 DLH & he makes 500/ year The 24’ boat has $9,000 of DM, 400 DLH & he makes 450/ year Estimated yearly MOH is $3,000,000 & his pay rate is $15/ hour
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