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Dab Industries manufactures towels which it sells to retailers. Dab operates separate production lines for Cotton towels, Linen towels, and Synthetic towels. The estimated
Dab Industries manufactures towels which it sells to retailers. Dab operates separate production lines for Cotton towels, Linen towels, and Synthetic towels. The estimated annual manufacturing overhead costs and machine hours associated with each of these production lines are as follows: Production line Overhead costs Cotton towels $2,500,000 Linen towels $3,000,000 Synthetic towels $1,000,000 Totals $6,500,000 Machine hours 10,000 15,000 15,000 40,000 If Dab applies overhead costs to jobs using a single plantwide rate based on machine hours, which products are over-costed or under-costed? O Linen and Synthetic are under-costed, whereas Cotton is over-costed O Cotton and Linen are under-costed, whereas Synthetic is over-costed Cotton is under-costed, whereas Linen and Synthetic are over-costed Synthetic is under-costed, whereas Cotton and Linen are over-costed None of the above
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