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Question4 Farragut, Inc. uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup,
Question4 Farragut, Inc. uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for 2014 and their allocation bases are as follows: Activity Materials handlings Machine setup Insertion of parts Total Budgeted Cost 15,000 3,200 60,000 88,000 Allocation Base Number of parts Number of setups Number of parts Finishing Finishing direct labor hours $ Total 166.200 Farragut expects to produce 500 chrome bumpers during the year. The bumpers are expected to use 4,000 parts, require 10 setups, and consume 1,000 hours of finishing time Requirements 1. Compute the predetermined overhead allocation rate for each activity 2. Compute the expected indirect manufacturing cost of each bumper
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