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5) Brilliant Accents Company manufactures and sells three styles of kitchen faucets: Brass, Chrome, and White. Production takes 25, 25, and 10 machine hours to manufacture 1,000-unit batches of brass, chrome, and white faucets, respectively. The following additional data apply: BRASS CHROME WHITE 50,000 40,000 Projected sales in units 30,000 $20 $30 Selling price $40 Direct materials Direct labor Overhead cost based on direct labor hours $ 8 $15 $ 3 $9 $12 $ 3 $ 9 (traditional system) Hours per 1000-unit batch: Direct labor hours Machine hours Setup hours Inspection hours 40 25 1.0 30 10 25 0.5 20 30 10 1.0 20 Total overhead costs and activity levels for the year are estimated as follows: Activity Direct labor houns Machine hours Setups Inspections verhead cost Activity levels 2,900 hours 2,400 hours 95 setup hours 2,700 inspection hours $465,500 Required: Using the traditional system, determine the operating profit per unit for the brass style of faucet Determine the activity-cost-driver rate for setup costs and inspection costs Using the ABC system, for the brass style of faucet: a. b. c. 1. compute the estimated overhead costs per unit. 2. compute the estimated operating profit per unit. d. Explain the difference between the profits obtained from the traditional system and the ABC system. Which system provides a better estimate of profitability? Why? 6) Describe some of the drawbacks of using the operating budget as a control device 7) What is benchmarking, and how is it useful to a company

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