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ABC Inc. produces a single product and manufactured 20,000 units last year. The company budgeted the following overhead costs for the year: Indirect Factory Wages:
ABC Inc. produces a single product and manufactured 20,000 units last year. The company budgeted the following overhead costs for the year: Indirect Factory Wages: $200,000 Factory Utilities: $50,000 Factory Depreciation:$30,000 Direct manufacturing costs per unit are $50. The company uses an activitybased costing system which compiles costs into 3 cost pools, machining, milling and assembly. The costs allocated to these activity cost pools break down as follows: Cost: Indirect Factory Wages: 50% 30% 20% Factory Utilities: 40% 40% 20% Factory Depreciation:10% 90% 0% The following cost drivers are used for each of the following activity cost pools: Machining: Machine Hours Milling: Milling Hours Assembly: Direct Labour Hours Practical capacity for each of the cost pools are shown below: Machining: 61,500 Machine Hours Milling: 107,000 Milling Hours. Assembly: 12,500 Direct Labour Hours Actual Usage was as follows: Machining: 40,000 Machine Hours. Milling: 80,000 Milling Hours. Assembly: 15,000 Direct Labour Hours Each unit requires a budgeted 2 Machine hours, 1 Milling Hour and 4 Direct Labour Hours. ABC's policy is to charge a markup of 100% on budgeted cost to customers. The selling price for each unit of product using activity based costing is: A) $71 per unit B) $70 per unit C) $57 per unit. D) $142 per unit How to find the selling price
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