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In its first year of operations a company produced and sold 70,000 units of Product A at a selling price of $20 per unit and
In its first year of operations a company produced and sold 70,000 units of Product A at a selling price of $20 per unit and 17.500 units of Product 8 at a selling price of $40 per unit. Additional information relating to the company's only two products is shown below: Product A Product B Total Direct materials $436,3ee $251,780 $ 688,000 Direct labor $200,000 $184, eee 304, eee Manufacturing overhead 608, eee Cost of goods sold $1,600,000 The company created an activity based costing system that allocated its manufacturing overhead costs to four activities as follows: Activity Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product design (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost Manufacturing Overhead $213,500 157, 500 120,000 117, eee 5608,eee Product A Product B 81,600 70.900 75 300 1 1 NA NA Total 152,500 375 2 NA The company's ABC implementation team also concluded that $50,000 and $100.000 of the company's advertising expenses could be directly traced to Product A and Product B. respectively. The remainder of its selling and administrative expenses ($400,000) was organization-sustaining in nature. The company's activity-based costing system would allocate how much manufacturing overhead to Product A? Multiple Choice $203 940 $210,740 $200,940 O $205740
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