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How do you get the answer MC Qu. 07-24 ABC Inc. produces a single product and manuf... ABC Inc. produces a single product and manufactured
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MC Qu. 07-24 ABC Inc. produces a single product and manuf... ABC Inc. produces a single product and manufactured 20,000 units and sold 10,000 units last year. ABC had a practical production capacity of 20,000 units per year. The company budgeted the following overhead costs for the year: Indirect Factory Wages: Factory Utilities: Factory Depreciation: $140,000 $ 50,000 $ 10,000 Direct manufacturing costs per unit are $100. The company uses an activity-based costing system which compiles costs Into 3 cost pools, machining, milling and assembly. The costs allocated to these activity cost pools break down as follows: Usage Cost: Indirect Factory Wages: Factory Utilities: Factory Depreciation: Assembly 20% Machining Milling 50% 30% 40% 40% 10% 90% 20% 0% The following cost drivers are used for each of the following activity cost pools: Machining: Machine Hours Milling: Milling Hours Assembly: Direct Labour Hours. Practical and expected capacity for each of the cost pools are shown below: Machining: 45,500 Machine Hours Milling: 71,000 Milling Hours. Assembly: 38,000 Direct Labour Hours. Actual Usage was as follows: Machining: 40,000 Machine Hours Milling: 80,000 Milling Hours. Assembly: 15,000 Direct Labour Hours. Each unit requires a budgeted 2 Machine Hours, 1 Milling Hour and 4 Direct Labour Hours. ABC's policy is to charge $84 per unit. ABC's cost per unit using traditional costing wasStep by Step Solution
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