Question 6 (2 points) Ferguson Co. manufactures two different products: Prep Alpha and Prep Beta. Budgeted overhead costs fall under the following categories: setting up machines, $500,000; machining, $2,800,000; and inspecting, $800,000. Budgeted information on the two products for the year are as follows: Direct Labour Hours Machine Setups Machine Hours Inspections Prep Alpha 150000 455 45600 120 Prep Beta 200000 652 45800 150 What is the applied overhead to Prep A using activity based costing? 1876957 1683613 1526779 1773043 Question 7 (2 points) Last year, Icee Company had a total variable production cost of $20,000, and fixed manufacturing overhead costs of $9,800. Icee produced a total of 7000 units during the year, and sold 6200 units. Icee had no beginning inventory at the start of the year. Which of the following statements is correct? Net income under variable costing would be $1,120 higher under absorption costing Net income under absorption costing would be $12,500 higher under absorption costing Net income under absorption costing would be $1,120 lower under absorption costing Net income under absorption costing would be $1,120 higher under absorption costing