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Assume a company produces and sells only two products-14.000 units of Product A and 6.000...

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Accounting

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Assume a company produces and sells only two products-14.000 units of Product A and 6.000 units of Product B. The seling prices are $65 per unit for Product A and $96 per unit for Product B. Product A's direct materials and direct labor costs per unit are $30 and $12, respectively. Product B's direct materials and direct labor costs per unit are $34 and $15, respectively. The company uses a plantwide overhead rate based on direct labor dollars. It is considering Implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following additional Information is available for the company as a whole and for Products A and B: Activity Cost Pool Machining Machine setups Product design Activity Measure Machine-hours Number of setups Number of products Estimated Overhead Cont $300,000 $150,000 $ 80,000 Expected Activity 15,000 MM 200 Setups 2 Products Activity Measure Machine-hours Number of setups Number of products Product A 9,000 50 1 Product B 6,000 150 1 When comparing Product A's total overhead costs using the traditional approach with its total overhead costs using the activity-based approach which of the following statements is true? Multiple Choice 8 of 16 Next >

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