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1. The following table provides information about two products made by a company: Product 1 Product 2 Units Units produced/sold 1,000 4,000 Price Sales
1. The following table provides information about two products made by a company: Product 1 Product 2 Units Units produced/sold 1,000 4,000 Price Sales Price per unit $ 150 $ 100 Cost Direct Materials Cost per unit $ 90 $ 45 Direct Labor Cost per unit $ 30 $ 15 Activities Direct Labor Hours Machine Hours Setups 2,000 4,000 800 4,700 20 10 Additionally, the company had $150,000 of indirect, manufacturing overhead costs. a. Calculate the following amounts, assuming the company uses a Traditional costing system to apply overhead, and identifies Direct Labor Hours as the relevant Cost Driver: Overhead Cost per Unit: Total Cost per Unit Product 1 Product 2 Gross Profit per Unit b. Calculate the following amounts, assuming the company, instead, uses an Activity Based Costing system to apply overhead and uses two overhead pools as follows: Pool 1 Cost $ 80,000 Pool 2 $ 70,000 Cost Driver Setups Machine Hrs Product 1 Product 2 Overhead Cost per Unit Total Cost per Unit Gross Profit per Unit
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