Golder Company has identified the following overhead activities, costs, and activity drivers for the coming year:

Required:
1. Determine the total overhead assigned to each product using the four activity drivers.
2. Determine the total overhead assigned to each model using the two most expensive activities. The costs of the two relatively inexpensive activities are allocated to the two expensive activities in proportion to their costs.
3. Using ABC as the benchmark, calculate the percentage error and comment on the accuracy of the reduced system. Explain why this approach may be desirable.

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Activity Expected Cost Activity Driver Activity Capacity Setting up equipment Ordering materials $252,000 Number of setups 300 36,000 Number of orders 1,800 Machining 252,000 Machine hours 21,000 Receiving 60,000 Receiving hours 2,500 Golder produces two models of cell phones with the following expected activity demands: Model A Model B Units completed 10,000 20,000 Number of setups 200 100 Number of orders 600 1,200 Machine hours 12,000 9,000 Receiving hours 750 1,750