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Fairfield Group uses ABC to account for its chrome wheel manufacturing process. Company managers have identified four manufacturing activities that incur manufacturing overhead costs:
Fairfield Group uses ABC to account for its chrome wheel manufacturing process. Company managers have identified four manufacturing activities that incur manufacturing overhead costs: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for the upcoming year for each activity is given below: Materials handling.... Machine setup Insertion of parts.. Finishing... $10,500 $14,600 $50,300 $70,900 The allocation base for each activity is given below: Materials handling Machine setup. Number of parts Number of setups Insertion of parts. Finishing... Number of parts Finishing direct labor hours Fairfield Group expects to produce 5,000 chrome wheels during the year. The wheels are expected to use 3,100 parts, require 18 setups, and consume 1,500 hours of finishing time. Job 007 used 250 parts, required 5 setups, and consumed 125 finishing hours. What is the cost allocation rate for machine set up? A) $30.39 B) $811.11 $2,920 D) $200.92
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