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Implement activity-based costing for a manufacturing company with the following data: Activity Total Cost ($) Cost Driver Cost Driver Quantity Activity 1 60,000 Units Produced
Implement activity-based costing for a manufacturing company with the following data:
Activity | Total Cost ($) | Cost Driver | Cost Driver Quantity |
---|---|---|---|
Activity 1 | 60,000 | Units Produced | 25,000 |
Activity 2 | 50,000 | Number of Setups | 500 |
Activity 3 | 70,000 | Machine Hours | 10,000 |
Requirements:
- Calculate the cost per unit of the cost driver for each activity.
- Assign overhead costs to products using activity rates.
- Present the allocation process in a table format.
- Discuss the advantages of ABC over traditional costing methods.
- Identify potential limitations of ABC implementation.
- Provide recommendations for effective implementation.
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