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PR 5 - 4 9 ( Algo ) Activity - Based Costing; Product Promotion ( LO 5 - 1 , 5 - 2 , 5
PR Algo ActivityBased Costing; Product Promotion LO Maxey & Sons manufactures two types of storage cabinetsType A and Type Band applies manufacturing overhead to all units at the rate of $ per machine hour. Production information follows. The controller, who is studying the use of activitybased costing, has determined that the firm's overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours, and outgoing shipments, which are the activities' three respective cost drivers, follow. The firm's total overhead of $ is subdivided as follows: manufacturing setups, $; machine processing, $; and product shipping, $ Required: Compute the unit manufacturing cost of Type A and Type B storage cabinets by using the company's current overhead costing procedures. Compute the unit manufacturing cost of Type A and Type B storage cabinets by using activitybased costing. Is the cost of the Type A storage cabinet overstated or understated ie distorted by the use of machine hours to allocate total manufacturing overhead to production? By how much? Assume that the current selling price of a Type A storage cabinet is $ and the marketing manager is contemplating a $ discount to stimulate volume. Is this discount advisable? Complete this question by entering your answers in the tabs below. Compute the unit manufacturing cost of Type A and Type B storage cabinets by using the company's current overhead costing procedures.
PR Algo ActivityBased Costing; Product Promotion LO
Maxey & Sons manufactures two types of storage cabinetsType A and Type Band applies manufacturing overhead to all units at
the rate of $ per machine hour. Production information follows.
The controller, who is studying the use of activitybased costing, has determined that the firm's overhead can be identified with three
activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours, and
outgoing shipments, which are the activities' three respective cost drivers, follow.
The firm's total overhead of $ is subdivided as follows: manufacturing setups, $; machine processing,
$; and product shipping, $
Required:
Compute the unit manufacturing cost of Type A and Type B storage cabinets by using the company's current overhead costing
procedures.
Compute the unit manufacturing cost of Type A and Type B storage cabinets by using activitybased costing.
Is the cost of the Type A storage cabinet overstated or understated ie distorted by the use of machine hours to allocate total
manufacturing overhead to production? By how much?
Assume that the current selling price of a Type A storage cabinet is $ and the marketing manager is contemplating a $
discount to stimulate volume. Is this discount advisable?
Complete this question by entering your answers in the tabs below.
Compute the unit manufacturing cost of Type A and Type B storage cabinets by using the company's current overhead costing
procedures.
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