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All-Your-Cars Ltd is a multinational company that produces and sells spare parts for the automotive industry. The traditional costing system used by the company is

All-Your-Cars Ltd is a multinational company that produces and sells spare parts for the automotive industry. The traditional costing system used by the company is based on number of units for charging overheads to products, and the CEO thinks that this could lead to poor pricing decisions, considering the different level of complexity of the three main lines of production. Recent improvements in the accounting information system, however, now allow the CEO to gather the information needed to improve pricing decisions. The information that follows are related to the old and the new system

Selected data from the old information system (year 2019):

image text in transcribedimage text in transcribed
Total manufacturing 21,000 overhead Total output (units) 1,500 Model Al Model A2 Model A3 Total production 700 600 200 Material cost per unit $70 190 Direct labour cost per unit E30 $25 E16 Selected data from the new information system (year 2019): Cost Drivers Cost Annual Volume Set-ups $5,000 5,000 Inspection time - hours $4,000 250 Machine maintenance - hours $6,000 1,500 Purchasing related costs - orders $2,000 3,000 Shipments received - shipments $4,000 3,500Cost Drivers by line of Model Al Model A2 Model A3 production Set-ups 1,500 2,000 1,500 Inspection time - hours 100 150 Machine maintenance - hours 400 200 900 Purchasing related costs 1,000 400 1,600 orders Shipments received - shipments 1,000 500 2,000

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