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Harrison Company makes two products and uses a conventional costing system in which a single plantwide, predetermined overhead rate is computed based on direct labour-hours. These products are customized to some degree for specific customers. Data for the two products for the upcoming year follow: Rascon Parcel
Direct materials cost per unit $29.50 $23.50
Direct labour cost per unit $24.30 $4.80
Direct labour-hours per unit 0.90 0.30
Number of units produced 29,000 119,000 Required:
Problem 1. The company's manufacturing overhead costs for the year are expected to be $861,000. Using the company's traditional costing system, compute the unit product costs for the two products. (Do not round intermediate calculations and round your final answers to 2 decimal places.)
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Write a report to the dean that evaluates the quality of this analysis. In particular, focus on concerns about the accuracy of the data and the limitations of cost-volume-profit analysis.
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