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Could you really breakdown the allocation of overhead and especially setup costs? Vanderbilt Metal Works produces two types of metal lamps. Vanderbilt manufactures 24,640 basic
Could you really breakdown the allocation of overhead and especially setup costs?
Vanderbilt Metal Works produces two types of metal lamps. Vanderbilt manufactures 24,640 basic lamps and 6,250 designer lamps. Its activity-based costing system uses 5 two indirect-cost pools. One cost pool is for setup costs and the other for general manufacturing overhead. Vanderbilt allocates setup costs to the two lamps based on setup labor-hours and general manufacturing overhead costs on the basis of direct manu- facturing labor-hours. It provides the following budgeted cost information: Basic Lamps Designer Lamps Total Direct materials per lamp $ 5 $19 Direct manufacturing labor-hours per lamp 0.4 hours 0.5 hours Direct manufacturing labor rate per hour $30 $30 Setup costs $130,800 Lamps produced per batch 320 50 Setup-hours per batch 1 hour 2 hours General manufacturing overhead costs $ 89,877 Calculate the total budgeted costs of the basic and designer lamps using Vanderbilt's activity-based costing systemStep by Step Solution
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