Comparing Unit Costs - understated $65 per unit ($137 -...

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COMPARING UNIT COSTS A comparison of unit manufacturing costs under traditional costing and ABC shows the following  significant differences.  Illustration 17-11    Comparison of unit product costs The comparison shows that unit costs under traditional costing are significantly distorted. The cost of  producing The Boot is overstated $13 per unit ($82 - $69), and the cost of producing The Club is 
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Unformatted text preview: understated $65 per unit ($137 - $72). These differences are attributable entirely to how Atlas Company assigns manufacturing overhead. A likely consequence of the differences in assigning overhead is that Atlas has been overpricing The Boot and possibly losing market share to competitors. It also has been sacrificing profitability by underpricing The Club....
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This note was uploaded on 11/08/2011 for the course ACCOUNTING ac 202 taught by Professor - during the Fall '11 term at Montgomery.

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