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Gareth furniture P/L manufactures two types of tables The simple is a high-volume product, sales of 15.000 per annum The complex is a low-volume product
Gareth furniture P/L manufactures two types of tables The "simple" is a high-volume product, sales of 15.000 per annum The "complex is a low-volume product with sales of 2,660 per annum Each product requires 2 hours of direct labour (DLH) Total annual DLH is 14,000 (12.000 plus 2,000) DL cost is $24.00 per hour Estimated manufacturing overhead is $1,400,000 (DLH is used as the driver) Direct material costs are as follows; The simple $220.00 per unit The complex $460.00 per unit Following costs have been identfied in order to calculate costs applying the ABC method; Setting up machines Construction $100,000 $750,000 $550,000 no. setups: Machine hours: No: inspections 400 30,000 550 Inspections SimpleComplex Setting up machines Construction Inspections No: setups machine hours20,400 No: inspections 150 100 9,600 400 300 Calculate the actual costs per unit for both products using the Traditional and ARC methods, identifying the amount for each product that is overstated or understated (8 marks). You should show your calculations
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