This preview shows page 1. Sign up to view the full content.
Unformatted text preview: Activity Cost Allocation Machine setup $70,000.00 $30,000.00 100,000 Plant management 30,000.00 20,000.00 50,000 Supervision of direct labor 25,000.00 25,000.00 50,000 Quality inspection 30,000.00 70,000.00 100,000 Total Overhead $155,000.00 $145,000.00 Total $435,000.00 $545,000.00 Cost per unit $87.000 $54.500 Difference $(13.000) $6.500 #3 - High volume products such as B are allocated more overhead than low volume products such as A. High-volume products subsidize low-volume products, meaning that the company is undercosting A and overcosting B. ABC provides the company with a more accurate product cost and directs management to the high-volume, more profitable products....
View Full Document
This note was uploaded on 02/20/2012 for the course ACCT 102 taught by Professor Lee during the Spring '08 term at Rider.
- Spring '08