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Q2. ACME Widgets produces two products A and B. In Jan. 2002, the following activity and facility (sustaining) costs made up the total manufacturing overhead
Q2. ACME Widgets produces two products A and B. In Jan. 2002, the following activity and facility (sustaining) costs made up the total manufacturing overhead of $1,000,000 that was incurred. Activity costs are long-run variable but short-run committed, and facility costs are long-run fixed. Activity I Facility Activity Driver Activity capacity Overhead Production Setups Number of setups 50 setups $600,000 Finished goods inspection Units produced 300 units 300,000 Depreciation 50,000 Other 50,000 Total $1,000,000 Pertinent product-wise details for January 2002 are as follows (there was no beginning or ending inventory): Product A Product B Units Produced and Sold 100 175 Number of Setups 20 30 Total Sales Revenue $500,000 $650,000 Total Direct material and Direct labor used in production $120,000 $130,000 There were no selling or other administrative costs. 1. Prepare Activity Based protability statements for the two products. There may be extra rows below. 2. What would the allocation of Insim'on costs be under conventional (full-cost allocation) using units? To Product A: To Product B
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