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Gean produces golf carts.One of its plants in Texas produces two versions of carts: a basic model and a deluxe model. The deluxe model has
Gean produces golf carts.One of its plants in Texas produces two versions of carts: a basic model and a deluxe model. The deluxe model has a sturdier frame, a higher horsepower engine, bigger tires, and softer seats. At the beginning of the year, the following data were prepared by the controller's office for this Texas plant:
Expected Quantity to Produce Selling Price Direct Material Cost Direct Labor Cost Machine Hours Direct Labor Hours Activity Center {Cost Driver} Engineering Support (Hours) Receiving (Orders Processed) Material Handling (N umber of Moves) Purchasing (Number of Orders) Maintenance (Machine Hours Used) Paying Suppliers (Invoices Processed) Equipment Setups (Number of Setups) Basic 20,000 carts i 1,800 $ 500 $ 300 1,000 10,000 1,500 300 2,000 100 1,000 250 20 Deluxe 10,000 carts $ 3,600 i 1,000 $ 600 3,000 10,000 4,500 500 4,000 200 3,000 500 60 Total overhead costs of $6,000,000 associated with activig centers are reported as: Maintaining Equipment $ 1,140,000 Engineering Support 33 1,200,000 Material Handling 33 1,200,000 Setting Up Equipment $ 960,000 Purchasing Materials $ I600,000 Receiving Goods '5 400,000 Paying Suppliers $ 300,000 Providing Facility Space $ 200,000 Facility-level costs are allocated on basis of machine hours used . This provides a measure of time the facility is used by each productStep by Step Solution
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