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23 Chang Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on
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Chang Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, Plain and Fancy, about which it has provided the following data: Direct materials per unit Direct labor per unit Direct labor-hours per unit Annual production Plain $ 25.90 $ 4.30 0.20 40,000 Fancy $ 60.70 $ 21.50 1.00 25,000 The company's estimated total manufacturing overhead for the year is $1,230,900 and the company's estimated total direct labor-hours for the year is 33,000. The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below: Activities and Activity Measures Supporting direct labor (DLHS) Setting up machines (setups) Parts administration (part types) Total Estimated Overhead Cost $ 528,000 257,700 445,200 $1,230,900 DLHs Setups Part types Expected Activity Plain Fancy Total 8,000 25,000 33,000 1,656 921 2,577 680 380 1,060 The manufacturing overhead that would be applied to a unit of Plain under the company's traditional costing system is closest to: Multiple Choice $16.40. $3.20. $7.46. $23.86Step by Step Solution
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