Beta Manufacturing

• Beta Manufacturing produces two products: X and Y.
• X: Direct materials - $80,000, Direct labor - $40,000, Overhead - $20,000
• Y: Direct materials - $100,000, Direct labor - $50,000, Overhead - $25,000
• The company uses activity-based costing (ABC) to allocate overhead costs. Total overhead cost: $45,000. Activity cost driver rates: $12 per machine hour and $8 per labor hour. X uses 2,500 machine hours and 1,500 labor hours. Y uses 3,500 machine hours and 2,000 labor hours.

Requirement: Calculate the total cost for each product using ABC and compare it with traditional costing. Discuss the impact of the costing method on product pricing and profitability.

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