Ch5 ABC Question during lecture

Ch5 ABC Question during lecture - Total Manufacturing...

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Total Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labour-hours (DLHs). The company produces two types of gadgets, “Regular” and “Graphic”, about which it has provided the following data: Regular Graphic Prime costs per unit $12 $65 Direct labour-hours per unit 0.5 0.6 Annual production 28,000 10,000 The company’s estimated total manufacturing overhead for the year is $1,400,000 and the company’s estimated total direct labour-hours for the year is 20,000. Data for this proposed activity-based costing system appear below: Activity Cost Pool Cost Driver Estimated Overhead Cost Supporting direct labour Direct labour hours $ 383,740 Setting up machines Setups 190,260 Supplies administration Number of parts 826,000 Total $1,400,000 The budgeted activity levels for Regular and Graphic are as follows: Activity Regular Graphic Total Supporting direct labour 7,187 hours 12,000 hours 19,187 hours Setting up machines 540 setups 300 setups 840 setups Supplies administration
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Ch5 ABC Question during lecture - Total Manufacturing...

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