The manufacturing division of an electronics company uses activity-based costing.The company has identified three activities and the related cost drivers for indirect production costs.
Three types of products are produced.Direct costs and cost-driver activity for each product for a month are as follows:
Indirect production costs for the month are as follows:
Required:
A)Compute the indirect production costs allocated to each product using the ABC system.
B)Compute the indirect production costs allocated to each product using a traditional costing system.Assume indirect production costs are allocated to each product using the cost driver: direct labor hours.
Definitions:
Money Income
The total earning received by an individual or household including wages, salaries, and other forms of income, before any deductions.
Marginal Utility
The extra pleasure or advantage gained from consuming an additional unit of a product or service.
Total Utility
The complete satisfaction or pleasure a consumer derives from consuming a particular quantity of goods or services.
Budget Line
A graphical representation of all possible combinations of two goods that can be purchased with a given budget and prices.
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