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Joyous Inc. is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during

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Joyous Inc. is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Linden #5 jacket job. Company Linden #5 jacket job Direct materials $60,000 $2,400 Direct labor $15,000 $600 Manufacturing overhead costs $50,000 Machine-hours 100,000 mh 1,000 mh What amount of manufacturing overhead costs will be allocated to this job? $1.250 $450 $500 $650 Nichols Inc. manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturing overhead. The plant manager is considering switching-over to ABC costing system and has asked the accounting department to identify the primary production activities and their cost drivers which are as follows: Activities Material handling Assembly Inspection Cost driver Allocation Rate Number of parts $1 per part Labor hours $20 per hour Time at inspection station $10 per minute The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $30 per labor hour. Nichols' management is considering to implement ABC system because ABC system is a highly refined costing system ABC system requires minimal expertise to operate ABC system provides more accurate direct cost figures ABC system can be implemented cheaply

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