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Unformatted text preview: Demonstration problem of Activity Based Costing (ABC) Red computations are the answers to the questions Baseball Manufacturing, Inc. has four categories of overhead. The four categories and expected overhead costs for each category for next year are as follows: Materials handling 40,000 Setups 60,000 Inspection 100,000 Maintenance 200,000 Currently, overhead is applied using a predetermined overhead rate based upon budgeted direct labor hours. 50,000 direct labor hours are budgeted for next year. The company has been asked to submit a bid for a proposed job. The plant manager feels that obtaining this job would result in new business in future years. Usually bids are based upon full manufacturing cost plus 20%. Estimates for the proposed job are as follows: Direct materials $6,000 Direct Labor (800 hours) $8,500 Number of materials moves 8 Number of setups 4 Number of inspections 7 Number of machine hours 150 In the past, full manufacturing cost has been calculated by allocating overhead using plantwide overhead...
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This note was uploaded on 11/13/2011 for the course MBA 642 taught by Professor Jamesstephens during the Spring '11 term at Bellevue.
- Spring '11
- Financial Accounting