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XYZ manufactures a line of high-end exercise equipment of commercial quality. Assume that the chief accountant has proposed changing from a traditional costing system
XYZ manufactures a line of high-end exercise equipment of commercial quality. Assume that the chief accountant has proposed changing from a traditional costing system to an activity-based costing system. The financial vice president is not convinced, so she requests that the next large order for equipment be costed under both systems for purposes of comparison and analysis. An order from Slim-Way Salons, Inc., for 150 low-impact treadmills is received and is identified as the order to be subjected to dual costing. The following cost data relate to the Slim-Way order. Data relevant for both costing system: Direct Materials Direct labor hours 55,500 950 Direct labor rate per hour 18 In the traditional costing system, the predetermined overhead rate is 0 times of direct labor hours. Data relevant to t Activity Cost Pools Cost Driv Engineering design Engineering Machine setup Setups Machining Machine how Assembly Number of subassem Packaging and Packaging/s shipping hours Building occupancy Machine ho
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