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4. (18) Veeblefester Company manufactures

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Question;4. (18) Veeblefester Company manufactures two types of gizmo (Model A and Model B) in its Longmont plant. Product information: 4. (18) Veeblefester Company manufactures two types of gizmo (Model A and Model B) in its Longmont plant.Product information:Model AModel BDirect material/unit$40$55Direct labor/unit$32$47Budgeted volume (units)8,00010,000Setups5030Machine hours16,00024,000Shipments230170Budgeted overhead for the year is $3,200,000a) Compute the unit cost of each model if overhead is allocated on the basis of machine hours.b) Overhead costs are driven 55% by machining, 25% by setups, and 20% by shipments. Compute the unit cost of each model if overhead is allocated with an ABC system, using these three cost drivers.c) Model A currently sells for $300/unit. In order to meet budgeted sales volume, themarketing department is advocating a 15% price cut. Is this advisable? Explain.

 

Paper#44612 | Written in 18-Jul-2015

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