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Flyer Corporation manufactures two products. Product A and Product B. Product B is of fairly recent origin, having been developed as an attempt to enter

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Flyer Corporation manufactures two products. Product A and Product B. Product B is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product A. Product B is the more complex of the two products, requiring three hours of direct labor time per unit to manufacture, compared to one and one-half hours of direct labor time for Product A. Product B is produced on an automated production line. Overhead is currently assigned to the products on the basis of direct labor hours. The company estimated it would incur $396,000 in manufacturing overhead costs and produce 5,500 units of Product B and 22.000 units of Product A during the current year. Unit costs for materials and direct labor are: Product A $9 Direct materials Direct labor Product B $20 $15 $7 Required: a) Compute the predetermined overhead rate under the current method of allocation, and determine the unit product cost of each product for the current year. (8 Marks) b) The company's overhead costs can be attributed to four major activities. These activities and the amount of overhead cost attributable to each for the current year are given below: Expected Activity Product Al Product B Total Estimated Overhead Cost $170.000 700 1,000 1,700 37,000 3001 200 5001 Activity Cost Pool Machine setups required Purchase orders issued Machine hours required Maintenance requests issued 91.000 4,000 9.00 13,000 98,000 400 6001 1,000 Total S396,000 (12 Marks) Using the data above and an activity-based costing approach, determine the unit product cost of each product for the current year. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac)

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