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Kenneth Clark has been studying his department's profitability reports for the past six months. He has just completed a managerial accounting course and is
Kenneth Clark has been studying his department's profitability reports for the past six months. He has just completed a managerial accounting course and is beginning to question the company's approach to allocating overhead to products based on machine hours. The current department overhead budget of $1.052.460 is based on 35,082 machine hours. In an initial analysis of overhead costs. Kenneth has identified the following activity cost pools. Cost Pool Product assembly Expected Cost Expected Activities $ 595,000 42.500 machine hours Machine setup and calibration 336,600 5,100 setups Product inspection 64,860 1,410 batches Raw materials storage 56,000 280,000 pounds $ 1,052,460 (a) Calculate the company's traditional overhead rate based on machine hours. $ Overhead rate /MH
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