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1. Transatlantic Corporation has 2 fixed price contracts for 2 different clients. The Transatlantic Corp. has enough capacity for both contracts but is not sure
1. Transatlantic Corporation has 2 fixed price contracts for 2 different clients. The Transatlantic Corp. has enough capacity for both contracts but is not sure if they will be profitable. See data below: Customer Customer A Customer B Component Type Axle Gear Contract Value ($) $27,000 $100,000 Contract Quantity 1,000 unit 2,000 units Material cost/unit $15 $20 Molding time/batch 5 hours 7.5 hours Batch Size 100 units 50 units Yearly budgeted overheads are as follows: Activity Cost Driver Cost Driver Cost Pool Volume per year Molding Molding hours 2,000 $150,000 Inspection Batches 150 $75,000 Production Management Contracts 20 $125,000 Required: Calculate the activity-based costs and the profits for each contract (4 marks)
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