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The Milwaukee Company manufactures two models of scooters, deluxe and regular. The company has manufactured the regular model for years; the deluxe model was introduced recently to tap a new segment of the market. Although sales of the deluxe model have been increasing rapidly, the company's prots have steadily declined. Management has become increasingly concerned about the accuracy of its costing system. The current cost accounting system allocates manufacturing overhead costs to the two products on the basis of direct labor hours. For 2020, the company has estimated that it will incur $2,581,000 in manufacturing overhead costs and produce 20,000 units of the deluxe model and 500,000 units of the regular model. The deluxe model requires one hour of direct labor and the regular model requires 1/: hour. Direct labor costs $20 per DLH. The deluxe model requires 2 machine hours per unit and the regular model requires 0.5 machine hours per unit. Direct costs and selling prices per unit are as follows: Regular Deluxe Direct Material $8 $10 Selling Price $25 $60 The company is considering switching to an ABC system. A recent cost study revealed the following MOH related activities and costs: Activity Annual Cost Activig Drivers Purchase Orders $246,000 # of purchase orders Inspections $600,000 # of Inspections (per batch) Production Set-ups $710,000 Setup Hours (per batch) Machine Maintenance $450,000 Machine hours Facility Costs $575,000 # of units TOTAL $2.58 [.000 The company would like to allocated Machine Maintenance on a per machine hour basis; and facility level costs will be allocated on a per unit basis. The following information is related to activities: Note: for consumption ratios, round percentages to two decimals

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