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Activity-Based Product Costing Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has
Activity-Based Product Costing Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: Activity Production Budgeted Activity Cost Setup Inspection Shipping Customer service Total $502,500 112,500 111,800 145,200 38,400 $910,400 The activity bases identified for each activity are as follows: Activity Production Activity Base Machine hours Setup Number of setups Inspection Shipping Number of inspections Number of customer orders Customer service Number of customer service requests The activity base usage quantities and units produced for the three products were determined from corporate records and are as follows: Customer Number of Setups Machine Hours Number of Inspections Number of Customer Orders Service Requests Units White sugar 3,300 BO 260 800 Brown sugar 2,100 110 390 2,420 2.100 650 1100 30 8,250 190 5,250 80-5250
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