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A company has incurred total overhead costs of $200,000 for the period. These costs are allocated to two departments, A and B, based on machine
A company has incurred total overhead costs of $200,000 for the period. These costs are allocated to two departments, A and B, based on machine hours. Department A, responsible for heavy machinery operations, has 5,000 machine hours, and department B, focused on assembly tasks, has 3,000 machine hours. Calculate the overhead allocation rate per machine hour for each department. Discuss how this allocation method reflects the usage of resources in each department and its implications for cost management decisions
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