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Downward Facing Dog produces yoga products. In the past, a traditional overhead application system based on machine hours has been used. Downward is considering switching
Downward Facing Dog produces yoga products. In the past, a traditional overhead application system based on machine hours has been used. Downward is considering switching to Activity Based Costing in an effort to remain competitive in the market. Two activities and cost drivers related to manufacturing overhead costs have been identified. Budgeted information is as follows Budgeted Budgeted Cost Driver Manufacturing OverheadActivity Level General Factory Overhead Costs Inspection Overhead Costs $500,000 $210,000 50,000 machine hours 5,000 inspection hours If one of the company's products requires 5,000 machine hours and 200 inspection hours, would the product have been overcosted or undercosted under the traditional overhead allocation system and by how much in total? ( A, OB. O C. OD. 0 E. undercosted by $21,000 undercosted by $12,600 overcosted by $12,600 overcosted by $21,000 overcosted by $17,400
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