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Compute the amount of overhead allocated to one tablet

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Rawls Company (Overhead Allocation)

The following table provides information about Rawls Company that produces two products, cell phones and tablets.

Activity

Cost Driver

 

Activity level

 

Cost

Cell phones

Tablets

Production Setup

Number of setups

$180,000

10

20

Material handling

Number of parts

$15,000

19

31

Packaging and shipping

Number of units shipped

$60,000

25,000

15,000

Total Overhead Costs

 

$255,000

 

 

Question 1: Compute the amount of overhead allocated to one tablet if ABC principles are used to allocate overhead costs and discuss advantages and disadvantages using ABC method, compared to using traditional volume-based OH allocation, in this specific setting .

Reference no: EM132479725

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