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Hello, please show me how to work this problem. Multiple Cost Drivers Newman's Own manufactures a variety of specialty salad dressings. Production runs are both
Hello, please show me how to work this problem.
Multiple Cost Drivers Newman's Own manufactures a variety of specialty salad dressings. Production runs are both highrvolume and Iowrvolume activities, depending on customer orders. Assume the following represents general manufacturing costs (manufacturing overhead) and each cost's related activity cost driver for Newman's Own. Level Total Cost Units ofCost D Unit $ 600,000 20,000 machine hours Batch 40,000 400 customer orders Product 84,000 is products er The lime vinaigrette dressing required l,000 machine hours to fill 60 customer orders for a total of 4,000 cases. Note: Do not use negative signs with any ofyour answers. (a) Assuming all manufacturing overhead is estimated and predicted on the basis of machine hours, determine the predicted total overhead costs to produce the 4,000 cases of lime vinaigrette, (b) Assuming manufacturing overhead is estimated and predicted using separate rates for machine hours, customer orders, and products (a multiple-level cost hierarchy), determine the predicted total overhead costs to produce the 4,000 cases of lime Vinaigrette. (c) Calculate the error in predicting manufacturing overhead using machine hours versus using multiple cost drivers. indicate whether the use of only machine hours results in overpredicting or underpredicting the costs to produce 4,000 cases of lime Vinaigrette. 0 d) Lookingjust at batch level costs, calculate the error in predicting those costs using machine hours versus using customer orders. Indicate whether the use ofonly machine hours results in overpredicting or underpredicting the batch- evel costs to produce 4,000 cases of lime vinaigrette. e) Lookingjust at product-level costs, calculate the error in predicting those costs using machine hours versus using number of products. Indicate whether the use of only machine hours results in overpredicting or underpredicting the productlevel costs to produce 4,000 cases of lime vinaigretteStep by Step Solution
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