# B charlenes department uses older outdated machines

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b.Charlene's department uses older, outdated machines. She believes that her department is being allocatedsome of the overhead of Department SV, which recently bought state-of-the-art machines. After she requestedthat overhead costs be broken down by department, the following information was discovered:Department SVDepartment COverhead\$80,960\$17,204Machine-hours25,30037,000Labor-hours25,30018,700Using machine-hours as the department allocation base for Department SV and labor-hours as the departmentallocation base for Department C, compute the allocation rate for each.(Round your answers to 2 decimalplaces.)
c.Compute the cost of 1,000 gallons of each flavor of ice cream using the department allocation ratescomputed in requirement(b)if the number of machine-hours for 1,000 gallons of each of the three flavors ofice cream are as follows: strawberry, 65; vanilla, 70; and chocolate, 160.Direct labor-hours by product remainthe same as in requirement(a)Total CostStrawberry\$1,778Vanilla\$1,569Chocolate\$1,883.
3. After reviewing the new activity-based costing system that Janis McGee has implemented at JoplinIndustries’s Port Arthur manufacturing facility, Kris Kristoff, the production supervisor, believes that he canreduce production costs by reducing the time spent on machine setups. He has spent the last month workingwith employees in the plant to change over the machines more quickly with the same reliability. He plans toproduce 105,000 units of J25P and 42,500 units of J40X in the first quarter. He believes that with his moreefficient setup routine, he can reduce the number of setup hours for both the J25P and the J40X products by 30percent.

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