AN ACTIVITY-BASED COSTING (ABC) SYSTEM / TUTORIALOUTLET DOT COM

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AN ACTIVITY-BASED COSTING (ABC) SYSTEM /
TUTORIALOUTLET DOT COM
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AN ACTIVITY-BASED COSTING (ABC) SYSTEM /
TUTORIALOUTLET DOT COM
An activity-based costing (ABC) system FOR MORE
CLASSES VISIT www.tutorialoutlet.com Use the
following information to answer questions 9-10.
10 A company is considering the adoption of an
activity-based costing (ABC) system because the
managers suspect that their traditional costing
system distorts the product costs. This company
produces and sells two products Standard and
Deluxe. Their traditional costing system uses
machine hours (MHs) as the allocation base for
manufacturing overhead cost. The production
managers decided that major activities are
Assembly, Machine setups, and Parts
administration and determined the costs for each
activity. They also identi?ed how many MHs,
setups, and parts each product requires.
Additional information Standard Price 120 per
unit Costs Direct materials (DM) 32 per unit
Direct labor (DL) 15 per unit Units produced
250,000 units Activity Assembly (MHs) 100,000 MHs
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AN ACTIVITY-BASED COSTING (ABC) SYSTEM /
TUTORIALOUTLET DOT COM
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