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Several years after reengineering its production prooess, Burke Corporation hired a new controller, Ashley Adams. She developed an ABC system very similar to the one
Several years after reengineering its production prooess, Burke Corporation hired a new controller, Ashley Adams. She developed an ABC system very similar to the one used by Burke's chiet rival. Part of the reason Adams developed the ABC system was because Burke's profits had been declining even though the company had shifted its product mix toward the product that had appeared most profitable under the old system. Before adopting the new ABC system, Burke had used a plantwide overhead rate based on direct labor hours that was developed years ago. EEB (Click the icon to view the overhead costs and budgeted data.) Read the recuirements Requirement 1. Compute the gross profit per wheel if managers rely on the ABC unit oost data. (Enter amounts to two decimal places.) Begin by oomputing the total manufacturing cost per wheel for each wheel model i Requirements Burke Corporation Total cost per unit using ABC data Data Table 1. Compute the gross proft perwheel if managers rely on the ABC unit cost data. 2. Compute the gross proft perwheel if the managers rely on the plantwide allocation cost Standard Deluxe data Manufacturing Overhead Costs per Unit 3. Which product line is more profitable for the company? 4. Why might the controller have expected ABC to pass the cost-benefit test? Were there any Standard Deluxe waming signs that the company's dld direct-labor-based allocation system was broken? ABC cois Plantwide overhead rate Tho following data aro budgctod for the company's Standard 84.00$309.00 221.00$ 272.00 Tolal manufacluring cost Print Done and Deluxe models for next yoar Standard Deluxe Sales price per whecl Direct materials per wheel Direct labor per wheel $490.00 $ 610.00 30,00 $46.50 45.90 S50.50 PrintDone
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