: opens Sample Problem PA8. A company has traditionally allocated its overhead based on machine hours but had collected this information to change to activity-based

: opens
Sample Problem
PA8. A company has traditionally allocated its overhead based on machine
hours but had collected this information to change to activity-based
costing:
Estimated Activity
Product 2
Estimated Cost
Activity Center
Machine setups
Assembly parts
Packaging pieces
Machine hour per unit
Production volume
Product 1
15
3,000
500
45
3,000
400
$ 10,800
144,600
55,350
750
1,500
A. How much overhead would be allocated to each unit under the
traditional allocation method?
B. How much overhead would be allocated to each unit under activity-
based costing?

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