Melaleuca Manufacturing Ltd produces timber felling machines for the forestry industry around the world. Its two machines

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Melaleuca Manufacturing Ltd produces timber felling machines for the forestry industry around the world. Its two machines are the Tree Toppler, which cuts down trees and clears undergrowth, and the Melaleuca Muncher that pulps the timber into woodchips.

The costs, volumes and cost drivers for the year ended 30 June 2019 are as follows:

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Required

(a) Calculate the unit cost of each machine if all overhead costs are allocated on the basis of direct labour hours.

(b) Calculate the unit cost of each machine using activity-based costing.

(c) Which machine is likely to be overpriced using the single overhead allocation method of direct labour hours and which machine is likely to be underpriced?

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Accounting

ISBN: 9780730363224

10th Edition

Authors: John Hoggett, John Medlin, Keryn Chalmers, Beattie Claire, Hellmann Andreas, Maxfield Jodie

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