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Outer Limits, Inc. produces fencing units which require two processes, A and B, to complete. The best selling type of fence is made of pvc. Information related to the 8,000 units of pvc fencing produced annually is shown below.
Outer Limits' total expected overhead costs and related overhead data are shown below. The company uses departmental overhead rates based on machine hours in department A and direct labor hours in departmentB.
Determine the total amount of overhead assigned to each unit of pvc fencing.
Falling Prices
A situation where the general level of prices for goods and services decreases over time.
LIFO Method
An inventory valuation method that assumes the last items added to inventory are the first ones to be sold (Last In, First Out).
Periodic Inventory System
An inventory valuation method where the ending inventory and cost of goods sold are determined at the end of the accounting period.
Subsidiary Ledger
A detailed ledger that contains the individual accounts related to a specific category, supplementing the general ledger.
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