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Wess Co. has limited capacity and can produce either its standard product or its deluxe product. Additional information follows. 1. Using a single plantwide rate,
Wess Co. has limited capacity and can produce either its standard product or its deluxe product. Additional information follows. 1. Using a single plantwide rate, the company computes overhead cost per unit of $15 for the standard model and $20 for the deluxe model. Which model should the company produce? Hint: Compute product cost per unit and compare that with selling price to get eross profit per unit. 2. Using activity based costing, the company computes overhead cost per unit of $5 for the standard model and $40 for the deluxe model. Which model should the company produce? Hint Compute product cost per unit and compare that with selling price per unit to get gross protit per unit: 1) Standard Deluxe Selling price Product Costs: Direct Materials Direct Labor Overhead Gross Profit Using the plantwide rate, the company should produce the model 2) Standard Deluxe Selling price Product Costs: Direct Materials Direct Labor Overhead Gross Profit Using activity-based costing, the company should produce the model
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