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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


  1. Implement activity-based costing for a manufacturing company with the following data:

ActivityTotal Cost ($)Cost DriverCost Driver Quantity
Activity 160,000Units Produced25,000
Activity 250,000Number of Setups500
Activity 370,000Machine Hours10,000

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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