Question
What should I be focusing on for The Traditional Cost Application approach vs the ABC Approach? Darter Company manufactures two products, widgets and cogs. The
What should I be focusing on for The Traditional Cost Application approach vs the ABC Approach?
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Darter Company manufactures two products, widgets and cogs. The company expects to produce and sell 4,000 widgets and 5,000 cogs during the current year. The company uses activity-based costing. Darter has identified three overhead activity cost pools and their related cost drivers: (l) Engineering design, driven by design hours; (2) Product testing, driven by the number of product tests; and (3) General factory, driven by machine hours. Data relating to the company's three activity cost pools are given below for the current year: Activity Cost Pool Engineering design Product testing General factory Required: Estimated Overhead Cost s 80,000 $160,000 $240,000 Estimated Cost Driver Widgets 650 3,600 7,500 Cogs 950 2,800 8,500 2. Using the traditional approach, determine the applied overhead rate for Darter Company based on machine hours. Using the activity-based costing approach, determine the applied overhead rates for Darter Company.
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