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QUESTION TWO [8 Marks] Mokhtar Co. makes and sells window shades and window blinds to both Regional and Local customers. The following information relates to
QUESTION TWO [8 Marks] Mokhtar Co. makes and sells window shades and window blinds to both Regional and Local customers. The following information relates to its budgeted data for the current year: The total overhead cost is $235,000. Currently, overhead is allocated to the products on the basis of the direct labour cost. Fatima, the controller does not believe the data produced by the current system and is considering implementing an ABC system. She asks her accountant to conduct some investigations and the results are as follows: Thn two nroducts had the following expected use of cost drivers: Required: a. Compute the cost of the two products using the simple costing system. b. Compute the cost of the two products using the Activity Based Costing syste c. Briefly explain why the cost of the two products is different under the two specific examples from the data to support your answer. d. Briefly explain how management can use the data from a and b to make decisions. [1.5 Marks]
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