question archive The management of Gourmet Appliance Company in Exercise 26-14 has asked you to use activity-based costing to allocate factory overhead costs to the two products
The management of Gourmet Appliance Company in Exercise 26-14 has asked you to use activity-based costing to allocate factory overhead costs to the two products
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The management of Gourmet Appliance Company in Exercise 26-14 has asked you to use activity-based costing to allocate factory overhead costs to the two products. You have determined that $57,000 of factory overhead from each of the production departments can be associated with setup activity ($ 114,000 in total). Company records indicate.’ that blenders required 100 setups, while the toaster ovens required only 50 setups. Each product has a production volume of 5,000 units.
(a) Determine the three activity rates (assembly, test and pack and setup).
(b) Determine the total factory overheads and factory overhead per unit allocated to each product using the activity rates in (a).
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