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[Problem#3 - ABC] Cabalo Company manufactures two products, Product C and Product D. The company estimated it would incur $130,890 in manufacturing overhead during the
[Problem#3 - ABC] Cabalo Company manufactures two products, Product C and Product D. The company estimated it would incur $130,890 in manufacturing overhead during the current period. Overhead currently is applied to the products on the basis of direct labor hours. Data concerning the current period's operations appear below: Product C Product D Estimated unit production 400 units 1,200 units Direct labor hour per unit 0.7 hour 1.2 hours $10.7 $16.7 Direct material per unit Direct labor cost per unit $11.2 $19.2 Required: (a) Compute the predetermined overhead rate under the current traditional method, and determine the unit product cost of each product. (7 points) (b) The company is considering using an activity-based costing (ABC) system instead of its traditional system. The ABC system would use three activity cost pools. Data relating to these activities are given below: Activity for Product Total activity Activity for Product D 130 100 230 Activity cost Total pool overhead Machine setup $ 13,570 Purchase $ 91,520 orders General factory $ 25,800 total $ 130,890 810 1,270 2,080 280 1,440 1,720 Determine the unit product cost of each product using ABC. (20 points) Please round your answer to one decimal place
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