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Activity-based costing. The
Information related to Job 220 and Job 330 follows. Job 220 incurs more batch-level costs because it uses more types of materials that need to be purchased, moved, and inspected relative to Job 330.
Job 220 | Job 330 | |
Number of purchase orders | 21 | 9 |
Number of material moves | 18 | 6 |
Machine-hours | 30 | 70 |
Number of inspections | 10 | 2 |
Units produced | 17 | 5 |
- 1. Compute the total overhead allocated to each job under a simple costing system, where overhead is allocated based on machine-hours.
Required
- 2. Compute the total overhead allocated to each job under an activity-based costing system using the appropriate activity drivers.
- 3. Explain why Melody’s Custom Framing might favor the ABC job-costing system over the simple job-costing system, especially in its bidding process.
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