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Swifty, Inc. produces two types of gas grills: a family model and a deluxe model. Swifty's controller has decided to use a plantwide overhead rate
Swifty, Inc. produces two types of gas grills: a family model and a deluxe model. Swifty's controller has decided to use a plantwide overhead rate based on direct labor costs. The president of the company recently heard of activitybased costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company's operations:
tableFamily Model,Deluxe ModelDirect labor costs,$$
A
Compute the overgead rate using the traditonal plantwide approach?
B
Compute the overhead rates using activitybased costing approach?
C
Determine the difference in allocation between the two approaches?
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