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What is the potential impact between traditional (plantwide) approach and activity-based costing approach? Smithson, Inc. produces two types of gas grills: a family model and

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What is the potential impact between traditional (plantwide) approach and activity-based costing approach?

Smithson, Inc. produces two types of gas grills: a family model and a deluxe model. Smithson's controller has decided to use a plantwide overhead rate based on direct labor costs. The president of the company recently heard of activity-based 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: Total estimated overhead costs are $450,000. Overhead cost allocated to the machining activity cost pool is $270,000 and $180,000 is allocated to the machine setup activity cost pool

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