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The department has never sold its services to outside companies. But, because of its long history of success, larger manufacturers of agricultural products have approached
The department has never sold its services to outside companies. But, because of its long history of success, larger manufacturers of agricultural products have approached Cullumber to hire its R\&D department for special projects. Because the costs of operating the R&D department have been spiraling uncontrollably, Cullumber's management is considering entertaining these outside approaches to absorb the increasing costs. However, (1) management doesn't have any cost basis for charging R\&D services to outsiders, and (2) it needs to gain control of its R&D costs. Management decides to implement an activity-based costing system in order to determine the charges for both outsiders and in-house users of the department's services. R&D activities fall into four pools with the following annual costs. Activity analysis determines that the appropriate cost drivers and their usage for the four activities are: Compute the activity-based overhead rate for each activity cost pool
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