Baja Industries Has Recently Switched Its Method of Applying Manufacturing

question 35

Essay

Baja Industries has recently switched its method of applying manufacturing overhead from a single predetermined overhead rate based on direct labor hours to activity-based costing (ABC). Assume that the direct labor rate is $18.00 per hour and that there were no beginning inventories. The following cost drivers and rates have been developed for allocating manufacturing overhead costs:
The following production, costs, and activities occurred during the month of August:
(a.) Calculate the total manufacturing cost and the cost per unit for the month of August.(b.) Assume instead that Baja Industries applies manufacturing overhead on the basis of $40.00 per direct labor hours (rather than the ABC method). Calculate the total manufacturing overhead cost applied for the month of August.(c.) Which method of applying overhead do you think provides better information for manufacturing managers?

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Definitions:

Scientific Data

Information obtained through empirical research and methodology, used to form conclusions, theories, or models in science.

Environmental Experiences

Interactions with the physical and social surroundings that influence an individual's behavior, perceptions, and development over time.

Bariatric Surgery

Surgical procedures performed on the stomach or intestines to induce weight loss, typically in cases of severe obesity.

Gastrointestinal System

The digestive tract and its accessory organs, involved in the digestion and absorption of food.