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please show steps Porter Ltd., manufactures motors and compressors. Porter has been accumulating manufacturing overhead costs into one cost pool, and charged $250 overhead cost
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Porter Ltd., manufactures motors and compressors. Porter has been accumulating manufacturing overhead costs into one cost pool, and charged $250 overhead cost to each unit of product. Porter made 4,200 units of motors and 2,800 units of compressors last year. The cost accountant believes that there are significant differences in how each product line uses resources, and is considering using the ABC costing method to allocate the manufacturing overhead costs. She analyzes the manufacturing overhead costs and gathers the following information: Activity Costs Cost Driver 50% of the overhead costs is for machine amortization Number of units 30% of the overhead costs is for inspections Number of inspections Number of designs 20% of the overhead costs is for design The Motor Department has inspected 850 times and 20 designs done, while the Compressor Department has inspected 1,250 times and 50 designs done. Calculate the total manufacturing overhead costs allocated to the Motor Department, using the traditional method: Calculate the total manufacturing overhead costs allocated to the Compressor Department, using the traditional method: $ Identify the cost hierarchy level for each activity: Activity Cost Hierarchy Machine amortization [ Select] Inspection [ Select]Step by Step Solution
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