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Menno Corporation manufactures two products-Tables and Chairs. The annual production and sales of Tables is 2,000 units, while 8,000 units of Chairs are produced and sold. The company has traditionally used direct labour hours to allocate its overhead to products. Tables require 1.0 direct labour hours per unit, while Chairs require 0.5 direct labour hours per unit. The total estimated overhead for the period is $235,000. The company is looking at the possibility of changing to an activity-based costing system for its products. If the company used an activity-based costing system, it would have the following three activity cost pools:
Expected Activity
-The cost pool activity rate for machining costs would be closest to
Liabilities
Financial obligations or debts owed by a company to external parties, creditors, or suppliers that must be settled over time.
Shareholders' Equity
The residual interest in the assets of a company after subtracting liabilities, representing ownership equity.
Total Assets
The sum of all current and noncurrent assets owned by a company, reflecting its overall value.
Retained Earnings
The portion of a company's net income that is held or retained for reinvestment in the business or to pay debt, rather than being paid out as dividends.
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