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AnoDigiinc (AD uses a traditional approach to overhead allocation. The company produces two different models of weight scales for use in homes: Analog (an analog
AnoDigiinc (AD uses a traditional approach to overhead allocation. The company produces two different models of weight scales for use in homes: Analog (an analog scale) and Digital (a digital weight scale with readout). Prices for the two products are based on full costs of production (le, inclusive of allocated manufacturing overhead). In 2014, ADi incurred $600,000 of factory overhead and produced 70,000 units of Analog model and 30,000 units of Digital model Overhead was applied based on a predetermined overhead rate per direct labour hour. The wage rate is $12 per direct labour hour and total labour cost is $600,000. Based on this rate, the cost per unit of each product in 2014 was as follows: Model A Model D Direct matema $14 $16 Direct labour 6 6 Factory overhead 6 6 Total $26 $28 The market is becoming more competitive, and ADI is looking into refining its costing system by introducing Activity Based Costing next year Which specific cost outlined above MAY change with the implementation of ABC? Direct Material Direct Labour Manufacturing Overhead Direct Labour and Manufacturing Overhead
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