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College Supply Company (CSC) makes three types of drinking glasses: short, medium, and tall. It presently applies overhead using a predetermined rate based on
College Supply Company (CSC) makes three types of drinking glasses: short, medium, and tall. It presently applies overhead using a predetermined rate based on direct labor-hours. A group of company employees recommended that CSC switch to activity-based costing and identified the following activities, cost drivers, estimated costs, and estimated cost driver units for Year 5 for each activity center. Activity Setting up production Processing orders Handling materials Using machines Providing quality management Packing and shipping Pounds of materials Machine-hours Recommended Cost Driver Estimated Cost Number of production runs Number of orders $24,000 Estimated Cont Driver Unita 80 runs 48,000 200 orders 14,000 7,000 pounds 56,000 8,000 hours Number of inspections Units shipped 48,000 40 inspections 36,000 18,000 unite $226,000 In addition, management estimated 2,000 direct labor-hours for year 5. Assume that the following cost driver volumes occurred in February, year 5.
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